Doing Business Outside Your State: Foreign Qualification

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Helena: Hello, everyone, and welcome to today's webinar, "Doing Business Outside Your State: Foreign Qualification." My name is Helena Ledic, and I'm the associate general counsel for CSC.

So joining me today for our presentation is one of my colleagues from CSC, Miranda Groom And then we're also joined by our very good friends from Potter Anderson. And let me turn it over to Mike from Potter Anderson to introduce the Potter Anderson team.

Mike: Thanks, Helena. And good morning, everyone. My name is Mike Maxwell. As Helena mentioned, myself and my colleague, Alyssa Gerace Frank, we are attorneys at the law firm of Potter Anderson & Corroon in Wilmington, Delaware. And today ourselves, as well as our friends from CSC, are going to be discussing foreign qualification of business entities. As we progress with the discussion, we'll unpack some basic terminology, including the words that we just used, "foreign" and "qualification." But before we get into that, let's run through the agenda. And so I'll turn it to Helena to handle that.

Helena: Great. So what we're going to cover is, of course, our introduction. And then what we're going to do is we're going to jump into corporate activities that generally don't require qualification and those that do require qualification. You'll hear a little bit about case law developments out there. We'll go into how corporations qualify, cure, and terminate that qualification, the consequences of failing to qualify, other regulations that might impact foreign entities. And then we'll get into the conclusion and the Q&A.

And what I do want to also let the audience know is that Mike and Alyssa are both Delaware attorneys, so a lot of their expertise is going to be centered around Delaware. So just keep that in mind that we have over here.

And then, of course, the other thing that what we do want to let everybody know is that this presentation is an overview of the foreign qualification process, about how to qualify, when to qualify, why, what happens if an entity is qualified but it's not. But this overview doesn't relate to any one particular state, and every situation should be evaluated independently based upon particular facts and circumstances of that entity's business and then the applicable state laws that are involved. So please keep that in mind when you're learning things over here.

And then, with that, what I'm going to do is I am going to turn things over to I believe it is Mike.

Mike: Thanks, Helena. And just to put a plug in, to Helena's point, it is important to evaluate each state's statutory requirements, case law, and along with the particular circumstances and facts of a situation. And there is a useful resource that CSC provides, conveniently described in the Qualification Handbook published by CSC. So if you're not familiar with that handbook or don't have a copy, talk to somebody at CSC, and I'm sure they can get that to you.

So with that, we'll jump into the meat of the discussion here. So most of us understand that a company, whether it's a corporation or an LLC, a partnership, or some other form of business organization, in many cases is a legal entity typically created under the laws of a particular state. And so we'll call this the home state. So this is the prototype company on which we're going to concentrate today. We're presupposing that an entity formed under laws of a U.S. state. So we're not addressing non-U.S. entities or entities existing under federal law, such as a bank, a national bank.

So the company exists because the laws of its state of formation grant the privilege of formation and enable the entity to conduct business. So as long as the company is properly formed and conducts business wholly within its state of formation, the company should not be subject to regulation by other states. As we all know, though, in the modern economy, a company rarely limits its operations to its home state. So before a company conducts any business outside its state of formation, it needs to determine whether its proposed business activities will require the company to qualify under any foreign state's laws.

Now as I said at the outset, we have some basic terminology that we're going to unpack, and we're addressing business entity qualification in a foreign state. So let's focus now on the these two words, "foreign" and "state."

So "foreign" in our context here means other than the business entity's state of incorporation or formation. So in other words, "foreign" means not the home state. And the term "state," as used in today's discussions, is going to mean one of the 50 states in the United States. So we're not covering non-U.S. law, and we're not going to cover municipal or county laws. So a foreign state, as we use that term today, is going to refer just to the 49 states other than the home state.

So qualification statutes stem from a variety of factors, and among them each state's desire to subject companies conducting business within the state to the jurisdiction of that state's court system so that its courts can render valid judgments against the company in the event that a lawsuit is initiated against the company in that state. The assessment of foreign qualification requirements involves a 50-state analysis, and determinations whether a company is doing business in a particular state require reference to those varied state laws, as we mentioned previously, right? You've got to look at each state's individual laws.

So in those laws, "doing business" is often defined in the negative, and those statutes list activities that alone are insufficient to require qualification in a foreign jurisdiction. These are termed as "exceptions to doing business." So example of Delaware statutes where this applies is the Delaware General Corporation Law, Section 373, and under the LLC Act, for example, 18-912. And we'll touch on these provisions a little bit further along in the course of our discussion.

And we should note at this point that qualification laws are not exclusive. So other state laws may apply to foreign entities, such as licensure statutes, maybe substantive regulatory schemes. I'm thinking like insurance or tax laws. So we're not in this program going to be considering or addressing all those aspects of an entity's conducting business outside its home state. And in particular, we're not speaking to licensure, regulatory, or tax issues.

So moving on to our next slide, a business entity is formed or incorporated or otherwise organized under the laws of a single state. In our case, we're talking about Delaware, and a lot of entities are organized under the State of Delaware. So as we noted, many entities conduct business in multiple states, and regulation of business activity varies state by state. So if a business is formed in Delaware, for example, and wishes to do business in the state of Florida, it may need to qualify in Florida, and this is foreign qualification.

Qualification is the last term that we want to talk about today or at least unpack and define for purposes of our discussion. In this context, qualification largely equates to registration. So we're really talking about a formal step to place a company on the record. So again, while the term "foreign qualification" might invoke the notion of an entity from another country satisfying some substantive standards, really what we're referring to here has to do with a domestic company that's conducting business activity in multiple U.S. states and it's taking required ministerial steps.

And all states have enacted laws requiring foreign entities doing business in a state to qualify. And so Alyssa now is going to talk to us about why states want entities to qualify to do business. Alyssa.

Alyssa: Thanks, Mike. So there are many reasons why a state might want a so-called foreign company to register to do business. Usually the entity is going to have to file annual or semi-annual reports and provide a registered agent for service of process within the state. And this has dual benefits for the state in terms of collecting filing fees and also for providing business to companies that provide in-state registered agents.

So states also want to protect their citizens and their local businesses. By requiring an out-of-state business to qualify to do business in a state, the state can gather information about the business, the nature of the business, and where it's being operated. It can also provide information for the state to be able to evaluate tax and other reporting or licensing requirements. And in particular, the state may want to ensure that a foreign business is subject to the same sorts of licensing requirements that a local business is, so that the out-of-state business isn't getting an unfair advantage over the home state business.

And I'll turn it back over to Mike for discussion on limits on state authority.

Mike: Thanks, Alyssa. So those are all legitimate state interests, and there are others. But this doesn't mean that the states have unlimited authority when it comes to business regulation, right? So the U.S. Constitution insulates interstate commerce from state regulation. So states are entitled to regulate activity to the extent it occurs within state boundaries. That's the fundamental distinction that implicates state regulation.

Notably, however, the federal government is not out here actively enforcing the Constitution. There's no dedicated constitutional enforcement department within the federal government. States, on the other hand, do actively enforce their business laws, and primarily reasons for that, generally speaking, come down to a state's interest in protecting its constituents and, of course, generating some revenue.

So Alyssa, can you talk now about what types of activity will require a company to qualify to do business in a state?

Alyssa: Sure. So Mike, as you noted earlier, the first thing a company should do is get a copy of CSC's Handbook because it examines questions just like this and it actually offers case examples so that legal professionals can begin to understand whether a particular company needs to qualify in a foreign state where it does business. Another recommendation is to review the qualification statute in each applicable foreign state. And we know that this is also included in the CSC Qualification Handbook.

We can provide some general advice on these statutes today during this webinar. But really it's not a substitute for reviewing what each state's laws say. So with that said, many qualification statutes define "doing business" in the negative. In other words, they define it by saying what "doing business" is not considered. So a statute will provide a list of activities that by themselves are not sufficient to require a company to qualify in that foreign jurisdiction. And these listed activities normally are referred to as "exceptions to doing business."

For example, Delaware defines which activities do not constitute "doing business" in each of its business entity statutes. If a company engages in any activities in Delaware that are not included in Delaware's "exceptions to doing business," then that company must qualify to do business in Delaware, or it'll risk penalties for failing to qualify. The potential penalties for failing to qualify will be discussed later on in this presentation. But depending on the state, those penalties can include being barred from enforcing contracts or bringing a lawsuit in that state. There could also be monetary penalties. And in some states, there's actually individual director or officer liability. So this is something definitely to pay attention to.

We should note that if a company engages in activities in a particular foreign state that are considered "exceptions to doing business" and as such exceptions they do not have to qualify to do business in that state, that doesn't mean that the company will not be subject to personal jurisdiction or taxation in that state. So a company may be subject to personal jurisdiction or taxation in a state by performing activities that are insufficient to cause the company to need to qualify to do business in that state. But that doesn't mean that it's insufficient for the government to want to tax the company. We're not providing tax advice, though.

But as such, we just want to note that it's important to keep in mind the other contexts in which a company's transaction of business in a state can have consequences, such as in the areas of jurisdiction and taxation. And we will talk about some case law developments with respect to personal jurisdiction later on in the webinar.

One last thing that we want to note on this point is that there may be exceptions to the qualification rules for particular types of businesses or industries. So for example, in Delaware, there's an exception for out-of-state insurance companies. They're not required to qualify to do business in Delaware with the Secretary of State. However, they are subject to separate rules under other laws, like Delaware's Insurance Code. So as such, it's important to keep in mind that regardless of whether a company is required to qualify to do business in a foreign state, there can be other licenses, permits, or other regulatory issues that the company may need to comply with in order to do business in a particular state.

Mike: All right. Thanks, Alyssa. So let's move into types of activities that may distinguish between a company being considered to do business in another state or not. So a company may be subject to negative consequences, including penalties, if it transacts business in a foreign state without first qualifying to do business there. But not all corporate activities require a company to qualify.

So the question whether a company is doing business for qualification purposes is determined on a case-by case and state-by-state basis. One generally recognized definition of "doing business" in a state is regular, repeated, and continuous business contacts of a local nature. And this definition has been adopted in a number of different cases. And, of course, different courts can and they do interpret and apply this definition and other applicable definitions differently. So for that reason, a case-specific factual evaluation of the activities of the company must be made. So the "doing business" evaluation, as I mentioned, is highly fact intensive.

So the first step in the assessment requires identifying the applicable jurisdiction and the relevant statutory provisions, including the exceptions. This initial step also requires that we understand whether there are different statutes to consider depending on the type of the entity at issue. So, for example, in Delaware, a foreign LLC is subject to a qualification statute different than the one applicable possibly to a foreign corporation. So the Delaware General Corporation Law has its own statutory provision, and the Delaware LLC Act or the Delaware Limited Partnership Act, they have their own foreign qualification statutes. So as I mentioned those statutes a little bit earlier.

So once the governing statutes and exceptions have been identified, then the next step is to review the relevant case law to understand how the courts have interpreted and applied these applicable provisions and exceptions. So generally speaking, the judicial decisions usually involve one of two factual scenarios.

The most frequent scenario involves a plaintiff company that's trying to litigate in a foreign state in which it has not qualified to do business. In this scenario, the defendant typically attempts to prevent the suit by arguing that under the applicable foreign state law, the plaintiff is barred from accessing the foreign state's courts because the plaintiff's activities constitute "doing business" there and the plaintiff has failed to qualify. We'll talk a little bit more about this sort of litigation bar as a consequence for non-qualification a little later in the presentation.

The other frequent scenario involves the non-qualified company as the defendant attempting to avoid suit in a foreign state. The defendant usually argues that it cannot be sued in the foreign state because it's not or was not "doing business" there.

In both scenarios, the non-qualifying company attempts to demonstrate that that its activities in the foreign state do not rise to the level of doing business in that state. So a court resolving this issue generally analyzes the relevant statutes to determine whether a company's activities require qualification. So accordingly, a client will ordinarily be served well by consulting experienced counsel and others who can help it navigate the "doing business" evaluation, such as our friends at CSC.

Thanks, Helena. So as we previously mentioned, there are a number of corporate activities that typically do not require qualification, also known as "exceptions to doing" business or safe harbors So Alyssa, maybe you can spend a little time reviewing for us some of these "exceptions to doing business" that typically appear in state qualification statutes.

Alyssa: Absolutely. So there are a number of general exceptions that are common across state statutes. Again, this is being discussed only in general terms, and you'd have to look at individual state statutes for specific exceptions. But we have just put together a list of things that we generally will see in the "exceptions to doing business" statutes.

So the first exception deals with litigation. A typical provision in a state statute would say that a company may maintain, defend, or settle any proceeding in the state without first qualifying to do business there. So if a company's only activity in the state is to commence a lawsuit, then the company doesn't necessarily need to qualify to do business in that state.

The next exception is that a company may hold a board of directors meeting or meetings, not just one, and carry on certain internal corporate activities in a foreign state without having to qualify to do business. Additionally, merely maintaining a bank account in a foreign state typically does not require qualification to do business.

Another common exception is that a company may maintain offices or agencies for the transfer of the company's own stock and securities without having to qualify to do business in the state where they're maintaining those offices or agencies.

And then another typical exception, a company typically is not transacting business for qualification purposes if it sells goods in a foreign state through independent contractors, but only so long as the sales transactions maintain interstate characteristics. I think we'll get into that a little bit more down the road in this presentation.

Another exception typically is soliciting or obtaining orders through mail, employees, agents, or other channels in a given state will not trigger the qualification requirement, provided that the orders require acceptance outside of that state before they become contracts.

The next exception we have listed here is typically invoked by banks that create mortgages and then foreclose on the property secured by that mortgage. So the states that have adopted these exceptions have agreed that creating mortgages and indebtedness and enforcing mortgages and security interests and property securing such indebtedness do not require the bank or the company seeking to collect on the debt to qualify in the jurisdiction where the property is located.

And a somewhat related exception involves merely owning real or personal property in a foreign state. Although many states have adopted this exception, few state courts have interpreted it. So there's not a lot of guidance on this one, and it makes it difficult to draw general conclusions about the corporate activities that might fall under this potential protection.

So moving on to exception nine, conducting an isolated transaction that is complete within 30 days and that is not one in the course of repeated transactions of a like nature generally does not constitute "doing business" for qualification purposes. It should be fairly simple to determine whether a company has complied with the statutory time limit in this exception. But it might be much more complicated to determine whether a company's activities constitute an isolated transaction.

So the answer to that question can vary from state to state, and it will be important to analyze the case law of the particular state at issue to determine how that state's courts interpret what it means to fall under an isolated transaction exemption. As a general matter, it's important to understand that a single act or transaction can mean more than an isolated transaction if it indicates a willingness or an intent to conduct other business in the state. So the key issue is whether the activity is sporadic and isolated such that it does not constitute carrying out the ordinary affairs of a company in that state.

The next general exception is for interstate commerce. That's a concept that we briefly touched on a few minutes ago. But the commerce clause in the United States Constitution prohibits states from regulating interstate commerce. States can only regulate intrastate commerce, meaning commerce within that state. So as a consequence, many states have adopted the exemption of transacting business and interstate commerce. So we do want to note, though, that the interstate commerce exemption or exception will apply even in those states that have not specifically codified it in their state statute because the U.S. Constitution overrides state law. So if a company's activity within a state is merely incidental to interstate commerce, then the company is not going to trigger a qualification requirement. However, if the activity becomes routinely localized in a particular state, then the company likely will be required to qualify to do business there.

And finally, the last exception that we want to note is the exception for companies that are responding to state-declared emergencies. So around half of U.S. states have enacted legislative exceptions to their business qualification rules for foreign companies that transact business or services in a state due to state disasters or emergencies. There are actually three more states that have introduced similar bills for this concept. So much of this can be attributed to the Model Business Act adopted by the National Conference of State Legislature, in 2014, that is called the Facilitating Business Rapid Response to State-Declared Disasters Act of 2014. So the idea behind this Model Act is provide states with model legislative language to waive qualification requirements for companies involved in the rapid response to state-declared emergencies, such as earthquakes, tornadoes, or man-made disasters, like chemical spills. Although more states have adopted similar acts in light of the COVID pandemic, not all states have adopted a version of this Model Act. So it's important to check applicable state law.

Mike, back to you.

Mike: Yeah. Thanks, Alyssa. So one additional thing just to remember here, as we're talking about these exceptions, is that these are general exceptions, so generalizations. You're going to hear us continually pounding on this topic, but each state's statutes may have exceptions that are different than those we've discussed here. So for example, as we mentioned earlier, the Delaware General Corporation Law provides an exception to qualification for an insurance company doing business in Delaware. But the type of entity you're dealing with will often dictate the statute a company will need to review for the exceptions. And as we previously mentioned, a foreign LLC engaging in activities in Delaware would look to relevant provisions of the Delaware LLC Act. An out-of-state limited partnership, likewise, would look to relevant provisions of the Delaware Limited Partnership Act, the corporation, the Delaware General Corporation Law, and so on.

All right. So let's move to slide 13 here, and we're going to talk now about what doing business means on a general level and the types of activities and conduct that constitute doing business. And so I'll let Alyssa walk us through that.

Alyssa: Thanks, Mike. So there are certain types of activities or actions that will typically trigger a finding of doing business in a state. As an example, if you have a physical presence in a state and you hold yourself out as doing business in that state, such as a listing in a phone book or another business directory, so like bring that into the 21st century, or a website showing an address in that state, if you advertise in that state, you're likely going to be considered to be doing business in that state. And that's really all kind of common sense.

If you're considering whether you should register in a particular state, consider the scope of your business activities there, such as whether you have a physical location, whether you have employees in that state, whether you take meetings with customers regularly in that state, or whether your company generates significant revenues in that state on an ongoing basis.

Mike: Thanks, Alyssa. So we have activities conducted in a foreign state that are regular, systemic, extensive, and continuous, the kind that can trigger a qualification requirement. As you might imagine and as we've discussed already, this area of the law is really fact intense and sensitive, right? You've got to look at the facts and circumstances of each individual situation.

Many corporate acts fall into a gray area between those that obviously require qualification and maybe those that do not. So this is a spot where the CSC Qualification Handbook can be very helpful because it delves into activities that are likely to require qualification.

Now while this list on our slide here is not exhaustive, it is representative of the kinds of activities that typically are going to require qualification. So those activities, as you can see here, may include accounting, advertising, banking, construction, sales, third-party sales.

So ultimately determining whether a company is doing business in a state will include an analysis that takes into the totality of the circumstances. In other words, if a company engages in multiple activities that may be on a one-off or even a two-off basis that would otherwise be exempt, the cumulative effect of those activities might result in finding that the company is doing business in the state. So as one hypothetical, having a sales rep might not be enough, even if they're an employee. This is up on the slide here. And having warehoused goods in a third-party facility may not be enough on its own to require qualification. But maybe the two together ends up being enough.

So with that, Alyssa is going to touch on a few of the examples listed in our previous slide, and I'll turn it back to her to talk about accounting.

Alyssa: Yeah. Thanks, Mike. So yeah, the first example that we're going to touch on is accounting. As noted in CSC's 50 State Guide to qualification, many states have enacted licensing statutes requiring out-of-state certified public accounting companies to obtain temporary permits before practicing in their states. Although the CSC book doesn't discuss these licensing requirements, accounting companies should note that they must obtain these temporary permits before conducting accounting activities in those states. Courts will often consider the state's licensing laws as one of several factors when determining whether a foreign accounting company is doing business in the state for qualification purposes.

So another example that we want to touch on is banking. Most states have a general qualification statute that identifies the maintenance of a bank account as a business activity that does not require qualification. In the four states that do not provide a bank account exception, the question becomes whether maintenance of a bank account triggers the obligation to qualify as a foreign company. And as an example, the Delaware qualification statute is silent as to whether maintenance of a bank account in Delaware requires qualification. At least one commentator has suggested, however, that the maintenance of a Delaware bank account alone or even together with other minor activities, such as, for example, advertising in a Delaware newspaper, would not by themselves be sufficient to constitute doing business in Delaware.

Mike: Great. Thanks, Alyssa. So now we're going to touch briefly on some recent case law developments, recent being relative, right? Some important cases as well as some more recent cases that relate to personal jurisdiction, which can be effected by qualifying in a foreign state. So just to set the table here, personal jurisdiction is a legal concept that refers to a court's authority over a party involved in a particular lawsuit and includes the court's power to render an enforceable decision against those parties.

So one type of personal jurisdiction is general jurisdiction. So if a court of a particular state has general jurisdiction over a party, that means that the court can render a decision against that party relating to any issue, regardless of whether the lawsuit is related to the party's contact with the state. So on the other hand, if a court has only specified personal jurisdiction or specific personal jurisdiction over a party, the court may only decide a case that arises out of or relates to the party's specific contacts with the state.

So with that as background, we're going to run through some recent case law. And then Alyssa is going to talk about a relatively recent Supreme Court decision that has had a more significant impact on a company's decision of whether to qualify to do business in a foreign state.

So the first case that we're going to talk about is the 2014 U.S. Supreme Court decision decided in Daimler AG v. Bauman. So in that case, personal jurisdiction can be established if a foreign company has a principal place of business within the state where the suit is brought, or if the company is incorporated in that state. But if neither of those elements is present, then in order to find personal jurisdiction, the courts must determine whether that company's affiliations with the state are so continuous and systematic as to render it essentially "at home" in that state. So in other words, the context must establish that the same type of close relationship with the state where the suit is filed as being incorporated there or owning a principal place of business in that state.

So state courts have reacted to the Daimler decision in a few different ways. One example is in the Delaware Supreme Court's 2016 Genuine Parts decision. That's the next case listed here on the slide. In Genuine Parts, the court held that merely registering to do business in the state and having a registered agent appointed to receive service of process does not subject a foreign corporation to general personal jurisdiction in Delaware for claims unrelated to Delaware. The court said that qualification in Delaware does not amount to a broad consent to personal jurisdiction in any cause of action, and that any use of the service of process provision for registered foreign corporations must involve an exercise of personal jurisdiction consistent with the due process clause of the 14th Amendment.

And more recently, the U.S. Supreme Court, in 2021, unanimously held in Ford Motor Company v. Montana Eighth Judicial District Court, again that's the third case down here in the slide, that when a company serves a market for a product in state and that product causes entry in the state to one of its residents, the state's courts have specific personal jurisdiction to hear the case. So the main legal issue in this decision was whether state courts have specific personal jurisdiction over a corporate defendant that has purposefully availed itself of doing business in the foreign state, but has not directly caused the plaintiff's injuries in that state through its conduct in that state.

The Ford Motor Company decision decided two companion cases, each of which involved the plaintiff resident of the forum state who was injured in the forum state by an allegedly faulty Ford vehicle. Ford did not design or manufacture the vehicle in the forum state, nor did it sell the vehicle to a dealer in the forum state. So in short, in each case, Ford had nothing to do with the allegedly faulty Ford's vehicles present in the forum state as each plaintiff bought its vehicle in a secondary market through a private sale.

Despite these facts, the Supreme Court found that the forum state properly had jurisdiction, and the court parsed whether each plaintiff's claim had arisen out of or related to Ford's activities in the forum state and held that a claim can relate to the defendants' activities even without a causal relationship. The court found that Ford, by advertising, maintaining retail dealerships, and providing parts and service for vehicles in the forum state, created a market in the state for its cars. Additionally, each plaintiff's harm in the forum state was caused by a Ford vehicle that was of the same type as Ford marketed in the state, which resulted in the court's finding of a relation to the creation of the market and triggered a finding of specific jurisdiction.

I will note that this is the first case since the 1980s that saw plaintiffs prevail on a personal jurisdiction case before the U.S. Supreme Court. That said, the Ford Motor Company case is a fairly narrow decision that may not apply if a plaintiff is not a resident of the forum state, or if a defendant doesn't market the exact type of product in the forum state that caused the alleged harm.

This concept has been supported more recently in a Delaware case, called Varsity Brands Holding Co. LLC v. Arch Insurance Co. We'll see that on the next slide. Here in February of 2025, the Delaware Superior Court ruled that two of the insurance company defendants were not subject to personal jurisdiction in Delaware for due process reasons. The court noted that while the insurers were licensed to sell insurance and conduct business in Delaware, this was not enough to establish personal jurisdiction as they had negotiated and executed the insurance policies outside of Delaware and the underlying claims did not occur in Delaware.

And Alyssa alluded to this previously as well, that qualifying to do business versus insurance regulatory requirements, that those things may be treated a little bit differently. But again, here, this case seemed to support the concept in the Ford Motor Company case, just in the opposite way.

Also on the Delaware law side, we just have a few examples of why it's important to understand the consequences of both doing and qualifying to do business in a foreign jurisdiction. And one of those consequences is being subject to specific personal jurisdiction in that state. And again, as I mentioned and we're continuing to beat this drum, people need to keep in mind that different states legislatures and courts may respond differently to precedent. So it's always important to review the relevant statutes for your particular jurisdiction, but also to review the relevant case law for that jurisdiction or that could apply to that jurisdiction.

All right. As I mentioned previously, Alyssa is going to discuss a recent Supreme Court case, again relatively recent, I think it looks like it was 2023, which has certainly been important in this area of the law dealing with personal jurisdiction and foreign qualification. So Alyssa is going to talk us through the Mallory case. Alyssa.

Alyssa: Yeah. Thanks, Mike. So many of you may have already heard about this case. It's called Mallory v. Norfolk Southern Railway Co., and it deals with a Pennsylvania statute that expressly states that by registering to do business in Pennsylvania an out-of-state company is automatically consenting to general jurisdiction in that state. The Mallory was filed in Philadelphia's Court of Common Pleas, and the plaintiff was a Virginia resident who is a former employee of Norfolk Southern. He sued the railway company, which is a Virginia corporation, with claims that he developed cancer from on the job exposure to asbestos and other toxic chemicals. And despite both the plaintiff and the railroad being based in Virginia, the plaintiff claimed that the Pennsylvania courts had personal jurisdiction over the defendant under the Pennsylvania statute that I just mentioned.

The defendant successfully contested personal jurisdiction at both the trial court level and the Pennsylvania Supreme Court level on the grounds that establishing general personal jurisdiction through business qualification is a violation of the defendant's due process rights under the 14th Amendment of the U.S. Constitution. The plaintiff then appealed to the U.S. Supreme Court. So in June 2023, the Supreme Court, in a 5-4 decision, found in favor of the plaintiff, ruling that so-called consent by registration jurisdiction does not violate the due process clause of the 14th Amendment, and that general personal jurisdiction can be established just by qualifying to do business in a state.

So the Supreme Court ultimately found that its 1917 decision in Pennsylvania Fire Insurance Company of Philadelphia v. Gold Issue Mining and Milling Co. was controlling. There, a Missouri statute, similar to the one being discussed in Mallory, required that out-of-state insurance companies desiring to transact business in a state agreed to appoint a state official to serve as the company's agent for service of process and accept service on that official as valid in any suit. In holding the exercise of jurisdiction over the defendant was valid, the court found the Missouri statute was consistent with the Constitution and with long-settled legal tradition, which permitted suits against individuals in any jurisdiction where they could be found. The court did not see fit to treat a fictitious corporate person any differently. And of particular import to the Supreme Court was the fact that the defendant had agreed to accept service of process in Missouri on any suit as a condition of doing business there.

So again, Mallory, the defendant, even though it was a Virginia corporation, had registered to do business in Pennsylvania, which has an express consent to jurisdiction language in its statute. And so the court found that to be constitutional.

And it's interesting because, as of as of this month, Pennsylvania, to our knowledge, is the only state with a statute that expressly provides for such a consent by registration jurisdiction. There are some other states, Georgia, Minnesota, and Iowa, that have statutes that have been interpreted to allow general jurisdiction based on the registration to do business there, but they're not the same as Pennsylvania's very explicit consent language.

So something that we do just want to briefly touch on is that since Mallory was decided, there have been a number of other cases seeking to use Mallory's holding as a basis for deriving or establishing personal jurisdiction over a defendant.

So the first post-Mallory case we're going to discuss is Bancredito Holding Corp. v. Driven Administrative Services LLC, where the defendant, a Puerto Rico LLC was registered to do business in North Carolina, and it appointed a registered agent in the state solely because it had one employee who lived and worked remotely for the company in North Carolina. And the decision did not mention whether that Puerto Rico LLC was required to register to do business in North Carolina because of that one remote employee. It just mentions that it did register to do business there. The Puerto Rico LLC had no other connection to North Carolina. It had a sole member that was the Puerto Rico LLC, and that sole member in turn had five members who were all Puerto Rico residents.

The plaintiff sought to use the business registration and registered agent appointment in North Carolina, citing Mallory, as the basis for the United States District Court for the Eastern District of North Carolina to have personal jurisdiction over the defendant. But the court noted that North Carolina's business registration statute does not contain the same express consent to jurisdiction language that the Pennsylvania statute at issue in Mallory contains. And it held that a fair reading of Mallory did not permit the North Carolina court to conclude that the defendant impliedly consented to general jurisdiction in North Carolina solely by registering to do business there and appointing an in-state agent.

And the other case we just want to briefly touch on is the September 2023 decision by the U.S. Court of Appeals for the Second Circuit, called Fuld v. Palestine Liberation Organization. In this case, the Court of Appeals vacated a judgment granted by a lower court against the Palestine Liberation Organization and the Palestinian Authority in favor of a group of U.S. citizens who had been injured in a terror attack in Israel.

The plaintiff's ability to establish personal jurisdiction over the defendants hinged on a federal law that provided for deemed consent to jurisdiction. There's a lot of diving into various ways to establish jurisdiction in this case. But what we want to take away is just that the Second Circuit concluded that the laws of deemed consent provision violated the due process clause of the Fifth Amendment because it was insufficient to establish the defendant's valid consent, either express or implied. And notably, the court highlighted that, unlike in Mallory, the defendants had not accepted any sort of inform benefit conditioned on being amendable to being subject to suit in the forum courts.

So the story does not actually end there because the plaintiffs appealed to the U.S. Supreme Court, and oral arguments were held in this case on April 1st of 2025. So stay tuned to see what the Supreme Court has to say about that.

I'll turn it back over to Mike.

Mike: Yeah. Thanks, Alyssa. So it does seem important, right? The fact that in the Mallory case the Pennsylvania statute required a foreign corporation's consent to jurisdiction as a condition for doing business there seemed to be critical, as we saw in the other case, where they didn't have that provision, that didn't extend that that treatment. So I think it just highlights again there's no substitute for careful reading of the applicable state's qualification statute. You really have to be aware of what's in there. And as Alyssa highlighted, I think Pennsylvania is the only one with the express provision like that. But it's important to be aware of those types of provisions as you're considering or thinking about qualifying or registering to do business in a foreign jurisdiction.

All right. So moving on in our presentation, let's talk a little bit about the intersection of qualification to do business with internet and eCommerce operations. So everyone knows that the internet has revolutionized a company's ability to transact business across state boundaries, whether it's buying and selling products and services or conducting virtual meetings and other business operations, or just communicating. The sheer volume of business activity that takes place over the internet on any given day has become mindboggling. So it's no surprise that internet activity has got lots of attention in the courtroom and corporate decision-makers are facing lots of legal issues involving their eCommerce and other internet activities.

So a company's gateway to the internet is its website So one significant legal issue regarding websites is whether a company's use of a website constitutes doing business in a state outside the one in which either the company is located or the website was created. So a company needs to determine whether maintaining or owning the website means that it has to qualify to do business in any state where either the website can be accessed or customers use the products or services offered on the website.

So there's relatively little statutory law and case law addressing the question of whether owning or operating a website constitutes doing business for qualification purposes. However, there have been a number of cases that address a similar issue, and that is whether a company's internet activities in a foreign state constitute doing business sufficient to justify the courts of that state exercising personal jurisdiction over the company. So exploring the issue of jurisdiction with regard to websites can be useful when trying to determine a company's need to qualify to do business based on its website activity.

So in broad terms, the important distinction between transacting any business for purposes of personal jurisdiction and doing business for purposes of qualification statutes is that a greater amount of business activity generally is required in order to compel a foreign company to qualify to do business within a state than the relevant amount of activity needed to merely subject it to personal jurisdiction. So this means that it's easier for a company engaging in activities in a foreign state to satisfy the minimum contacts test for jurisdictional purposes than it is maybe to satisfy the doing business test for qualification purposes.

So logically then if a company's contacts with a foreign state are not sufficient to justify the exercise of personal jurisdiction, the court should find that those same contacts will not trigger a company's duty to qualify in that state. So Alyssa, maybe you can give us a little more detail on this point.

Alyssa: Sure. So back in 2014, the U.S. Supreme Court's decision in . . . Mike is it Daimler or Daimler? I forget. Do you know?

Mike: I think it's Daimler.

Alyssa: All right. I'll go with Daimler. Made a huge impact, thank you, on judicial opinions regarding whether personal jurisdiction is created by internet activity or websites. Although Daimler was not an internet case, it explored the outer limits of personal jurisdiction in cases implicating global matters, including whether or not personal jurisdiction can be based on a website that can be accessed around the world. The analysis must determine when minimum contacts grant a court personal jurisdiction.

Before the Daimler decision, many courts applied a sliding scale test tailored to internet activities to determine the level or types of activities that constituted minimum contacts for general jurisdiction purposes. At one end of the scale were passive websites, which alone did not generate sufficient contact with a foreign state necessary to establish personal jurisdiction. Just to give some more context of what a passive website would be, it typically would refer to a website that's only used to post information, that does not actively solicit orders for goods or services, or support other commercial activities.

And then, at the other end of the scale are active websites, which generate sufficient business over the internet to establish personal jurisdiction. An active website serves as a gateway for conducting business over the internet between the website owner and residents of a particular state.

An interactive website falls in the middle of the scale, and courts determine whether to exercise personal jurisdiction over interactive website owners on a case-by-case basis. Interactive websites are hybrid sites that contain elements of both passive and active websites. An interactive website, for example, may allow users to exchange information with the website creator to order products, to make reservations, and to conduct other business, often using a credit card. The owner of an interactive website will not necessarily be subject to personal jurisdiction in a foreign state. To make this determination, most courts will look at the level of interactivity and the commercial nature of the exchange of information that occurs on the website, as well as whether the website owner targeted or aimed its efforts at the foreign state in question.

So there was a 2021 United States District Court for the Western District of Pennsylvania decision denying a defendant's motion to dismiss on the grounds the court lacked personal jurisdiction over the defendant, and it includes some helpful guidance. This decision stated that although the defendant, a California apparel business, operated a website and social media platform that were capable of doing business with a Pennsylvania customer, such as plaintiff, the mere fact that these online platforms tried to appeal to a customer base outside of California, without specifically referring to Pennsylvania in any particular way, was insufficient to establish a base for exercising in personam jurisdiction. However, the court denied the defendant's motion to dismiss without prejudice in order to allow the plaintiff to conduct jurisdictional discovery.

There are also a few other factors the courts may consider when they're evaluating jurisdictional issues for websites, and Mike is going to run through those.

Mike: Thanks, Alyssa. So post-Daimler, courts have applied a three-part effects test in determining whether specific personal jurisdiction can be established. So this test requires a showing that the defendant, one, committed an intentional act, which was, two, expressly aimed at the forum state, and three caused harm, the brunt of which is suffered and which the defendant knows is likely to be suffered in the forum state.

So certain courts have combined both the sliding scale and the effects test in the personal jurisdiction analysis. In fact, some of the federal courts have stated that a determination of personal jurisdiction based solely on the effects test is rare. So as a result of the Daimler decision, courts are now using the effects test as only one of the considerations in ascertaining whether contacts were continuous and systematic enough to render a foreign company essentially "at home" in the forum state.

Similarly, the status of the website as described under the sliding scale test, as Alyssa just talked about, active, passive, or interactive is still used by many courts. But it is only one factor of many in making a personal jurisdiction determination.

Now there's minimal case law in the question of whether email sent to a party in another state could single-handedly establish jurisdiction. A few cases that have been cited on the subject suggest that it can.

So in one Connecticut case, for example, the court found that it had jurisdiction over a Massachusetts company in a resident slip-and-fall action, where the injury occurred at the company's Massachusetts location as the company engaged in conduct that included emailing and soliciting business by reaching out to Connecticut residents and seeking their membership.

In 2019, a New York County Commercial Division Court found that the defendants were subject to New York jurisdiction under its so-called single act statute, which provides that a New York court may exercise personal jurisdiction over any foreign entity that transacts business within the state or contracts anywhere to supply goods or services in the state of New York. So the plaintiff here, a New York company had entered into a letter of intent with the defendant, an Illinois company, and filed for breach of contract in New York. The defendant challenged personal jurisdiction. But the New York court found that the defendant was subject to jurisdiction due to engaging in voluminous electronic communications consisting of emails and phone calls with the New York plaintiff.

The defendant argued that it was physically located in Illinois for every email, phone call, or text. But the court focused on the business that was being transacted, rather than the defendant's physical location, and found that the Illinois company had projected itself into the state of New York in order to create an ongoing contractual relationship with the New York plaintiff.

So ultimately, however, the issue of email as a basis for personal jurisdiction is still an evolving area of the law, and there's not a ton of decisional case law out yet. But you can expect, as we continue in our digital age, that that likely will change.

All right. So moving on to our next slide 21, we're going to come down off the mountain top a little bit now. We're going to stop talking quite as much about these theoretical issues and move a little bit more to the practical nuts and bolts.

So as noted previously, qualification involves a formal registration. So what does that mean? So Miranda, from CSC's perspective, can you give us a practical handle on how companies qualify, actually do the qualification to do business in a foreign jurisdiction?

Miranda: Yes, I would be happy to, Mike. Thank you. So this slide will give you a highlighted overview, but let's get into some of the details.

CSC can provide a name check on every order. Sometimes this means using a state website if that state provides real-time data. Other times, that means we have to call the state directly. Things that might affect name availability are similar names, noise words, such as and, the, of are not considered to be differentiated, and exact matches. Most states will allow some sort of consent from the conflicting entity, or they'll allow you to use a forced fictitious name.

Other things that might affect name availability are prohibited or restricted words. Prohibited and restricted mean two different things. Restricted words usually means that it can be used. There will just be additional supporting documents or approvals required from agencies, such as banking or insurance. Prohibited means it cannot be used at all. So in the case of insurance, one state may allow you to get that approval. Another state with that same word "insurance" considers it prohibited.

So once you've determined that your name is available for use and you've conquered any of those hurdles, the next step would be to gather your supports, which may be called different things in that entity's domestic state. The most common terms that are used are certificate of good standing, existence, compliance. In the case of a restricted word, it might include a copy of the professional license, or it may just be an approval letter from the banking or insurance division or whatever agency you had to obtain approval from.

So another step in the process is to figure out who you want to appoint and maintain as your registered agent. States may have options for an individual, and other states may require you to name an entity. Some may even allow the business to act as their own, while others may require you to use a third party. So CSC does offer agent representation services domestically and internationally, as well as for some special agencies that might require it.

Make sure to comply with publication and recording. These requirements vary and are governed by that state's statute. However, clients may ask for a publication or to record a filing outside that requirement, and that's perfectly acceptable too. We work with local papers and county clerks to get that done.

Naturally along with all of the above, the required filing document for that particular state agency will need to be prepared, whether an individual does that themselves, they ask a law firm, or a service company like CSC to assist. There are questions that are asked as part of that qualification paperwork that will help you determine your filing fee and the formulas can vary greatly between states. Hawaii has a flat fee of like $51, to a more complex fee structure in Illinois that factors in the proportions of business conducted, property owned within that state to the business and property owned elsewhere, and can be many of thousands of dollars.

Annual report filings, taxes, and fees are all examples of subsequent filings. States like California require an annual report to be filed within 90 days of qualification, and there are additional fees for that. While states like Alaska, they're going to require you to obtain a state business license, and that has to be filed any time prior to the start of business, not necessarily at the time of qualification. So that's important to note.

Corporations and other entities, such as LLCs or LPs, can have different state reporting and tax structures. So it's very important to know which structures best meet your business needs and goals. A lawyer or a CPA can help navigate this decision. This is not something that CSC would advise on. Once qualified, the entity will then have future obligations, as stated above, with continued annual reports. Back to you, Mike.

Mike: Great. Thanks, Miranda. And just to highlight again, looking at the relevant statutes. So for example, under the Section 371 of the Delaware General Corporation Law, it sets forth the requirements, the actual nuts and bolts of how you do this. So foreign qualification requires a payment of a fee, I think it's $80, and then filing a certificate evidencing the corporate existence, a statement executed by an authorized officer setting forth name and address of its registered agent, a statement about the assets and liabilities of the corporation, the business it proposes to do and is authorized to do. So again, and then similarly there are different requirements under the LLC Act. So important to look at the relevant statutes.

Helena, I know you, I think, wanted to mention something here. So I'll let you.

Helena: Yeah. So in addition to everything that we've talked about up to now, it's also important to talk about the ramifications that you have and consequences if you actually do qualify. So remember, if you qualify to do business in that state, we've talked about it, you may be subject to the jurisdiction in that state, but you'll also have those ongoing annual fees, registered agent requirements, annual reports, and things like that to be able to maintain that compliance. So that is also something to just keep in mind with all of that.

And then I think we're going to go on to our next slide over here, if I'm correct, and Alyssa is going to talk to us about the failures or how to cure those failures to qualify. So Alyssa, take it away.

Alyssa: Thank you, Helena. So yes, a company may find that it is doing business in a foreign state without a certificate of authority, and as a result, it could be subject to certain statutory penalties. Although state laws may vary on whether and how a company may cure this type of defect, generally speaking, the company is going to have to file an application for qualification and pay all required fees as well as any penalties that are associated with its failure to qualify in its late filing. In such a case, the effective filing is generally going to be retroactive. However, in certain situations and in certain states, failure to qualify may prevent a company from maintaining a lawsuit in that state. Therefore, a company should not opt out of qualifying in a state on the assumption that it can cure the failure to qualify in the future. And Miranda is going to discuss some examples that she has seen with respect to curing failures of a company to qualify, as well as termination of qualification.

Miranda: Thank you, Alyssa. Yes, it is very important to know and to understand how the failure happened first. So curing the failure is going to depend on the why, the what, the how it happened, and it varies from state to state.

One common example of failing to qualify, the ramification of in the state of Tennessee is if you start to do business 60 days prior to filing your registration, they allow that 60-day grace period, and after that penalties are incurred. After that 60 days, the SOS or the Secretary of State will assess a penalty that's equal to three times the amount of the qualification filing fee, also three times the amount of the annual report filing fees that would have been filed during that time of the commencing business. And if the entity indicates that they've been doing business in Tennessee for more than 12 months prior to the filing, the entity must supply a letter of no objection or tax clearance from the Department of Revenue to verify that all fees, taxes, and penalties owed to the state have been paid. So as you can imagine, that process gets very long. It gets complex, and it can be very costly.

Another example would be failing to file a subsequent filing, such as a first annual report. I mentioned California earlier. Missouri has the same similar requirement. You must file your first annual report within 60 days of qualifying. If the entity fails to do so, they are administratively revoked or involuntarily terminated, each state has a different phrase for that, and they will now have to reinstate. Now you're in that same similar situation as Tennessee because in order to get back into good standing, you're required to work with the Missouri Department of Revenue to report all those taxes, get your tax clearance document, and pay a penalty to now the Secretary of State. The penalty to the state is not as expensive as Tennessee, but the process with the Department of Revenue can become lengthy and very complex.

And sometimes, there is nothing an entity can do at all. So in the case of Connecticut, if you failed to file an annual report, the state will revoke that entity, and they are not allowed to cure it. So the entity must file new, losing all of their filing history.

Previous examples for Missouri and Connecticut are the result of involuntary terminations. A voluntary termination is when an entity files formal documents stating that they no longer will be doing business. Obtaining tax clearance can also be a part of a voluntary termination process, and in many cases we can assist you with that.

What happens to future process when an entity voluntarily terminates depends on that state. When an entity voluntarily terminates, they're able to provide the state with a mailing address for future service of process. In the case of Maryland, it's required to maintain an actual agent for one year. CSC does offer this one-year service to our clients. If you are involuntarily terminated, the entity is not given that option to elect where they want their service to go, and that can be a big consequence for that entity.

Back to you, Alyssa, for the next slide.

Alyssa: Thank you, Miranda. So a lot of companies may fail to pay attention to foreign qualifications, whether intentionally or unintentionally. On the unintentional side, it just might not occur to someone to qualify to do business in a certain state. But some might not want to qualify because they want to avoid all the filing fees, the additional taxes, reporting requirements, needing to appoint an agent for service of process, and all of the related and associated fees and expenses. So Mike, I'll turn it over to you talk about that.

Mike: Yeah, right. So let's say you've got an obligation to qualify, but you don't do it. So maybe we can talk about the consequences of that. Many states impose penalties or other consequences where a foreign company must but does not qualify to do business. So these measures typically are designed to encourage compliance. Alyssa, can you maybe give us an idea of the types of penalties that states use to enforce their foreign qualification laws?

Alyssa: Sure. So the main penalty is to prevent foreign companies from being able to maintain lawsuits in the foreign state's courts. Although some states also provide for monetary penalties. The denial of access to courts precludes unqualified foreign companies from maintaining lawsuits within their borders until they obtain a certificate of authority to do business in that state.

So for example, if an unqualified company files a lawsuit, the defendant may move to dismiss that lawsuit on the grounds that the company lacks standing to bring suit. Some states permit a court to stay a proceeding where a foreign company has not qualified, rather than dismissing it fully, until such company has qualified. But really, you just don't want to risk how that court is going to respond to the motion to dismiss. And so really the recommendation is to have been qualified to begin with.

In contrast, some states' penalty provisions do not give an unqualified foreign company an opportunity to cure a qualification deficiency after having filed a lawsuit. However, most states expressly permit unqualified companies to defend themselves when they are brought to court. And many state courts interpret these provisions to also allow unqualified foreign companies to file counterclaims against the opposing party in that same lawsuit.

Additionally, we do just want to note that most states include a provision stating that a failure to qualify before doing business in a foreign jurisdiction does not impair the validity of that company's corporate acts.

We're going to turn now to the next slide. So now we're going to talk about the monetary penalty aspect of failure to qualify. So most states do have monetary penalty provisions for a company's failure to comply with qualification requirements. Many of these states do not impose a substantial civil penalty for failure to qualify, but instead they require payment of back fees and taxes plus a penalty for being late. Other states may impose either a lump sum penalty or include the same provision of payment for all fees and taxes plus an additional monetary penalty, ranging anywhere from $10 a day to a penalty not to exceed $5,000.

So for example, under Section 378 of the Delaware General Corporation Law, a foreign corporation that's doing business in Delaware without complying with Delaware's qualification requirements is subject to fines of $200 to $500 for each offense.

And Miranda, would you be able to provide any examples that you've encountered of penalties for companies that failed to qualify?

Miranda: Yes, absolutely. The chart below here is representative of an entity that began doing business in a state where they failed to qualify for 15 years. So this chart will show you what the state fee would have been minimally if they had qualified at the start of business versus what they incurred due to that failure to qualify. So you can see those fees range greatly between Texas, Illinois, Florida only being $70, to Georgia and Tennessee. But now 15 years later, that fee is significantly increased.

In the state of Illinois, for example, you'll see in this particular example that fee was only $21,522.07. However, as stated earlier, they use a calculation, a formula on their qualification documents to figure out how much stock you have, property owned, those kinds of items to come up with that formula. So I have a colleague, that works in our Illinois office, who has recently had to cut a check for over $6 million for an entity that failed to qualify timely.

So this is a very important step in the process and to make sure that you are getting qualified when you need to be. So I'm going to go ahead and turn this back over to Mike to talk a little more about that personal liability.

Mike: And thanks, Miranda. So in addition to monetary penalties, there are, in some cases, potential criminal penalties on a company's directors, officers, or agents if they transact business on behalf of an unqualified foreign company. So for example, under Delaware Section 378 of the DGCL, an agent of a foreign corporation may be subject to fines of $100 to $500. Under Louisiana law, responsible officers, employees, or agents that are transacting business in the state without authority are subject to imprisonment in addition to fines. So it really does depend on the situation, the state, the jurisdiction. But just keep in mind that in addition to monetary policies, there may be these criminal, in some cases, penalties.

Alyssa, you're going to walk us through the slides.

Alyssa: Yeah. So we don't need to spend too much time on this slide. But basically, this is just a reminder that there are other potential penalties or consequences to not complying with registration statutes for foreign qualification. And I think we can just move on into the next slide about other regulation of foreign entities.

Mike: Yeah. And so we really are now getting close to the end of our journey here. Again, repeated reminder that other types of laws and regulations need to be considered when you're looking to do business in a foreign jurisdiction. And Alyssa, if you don't mind, I'll just quickly tick through these.

Alyssa: Sure.

Mike: A lot of these common requirements are licenses, regulatory, and taxes. Another one that I've seen come up a lot more recently is privacy laws. So for example, while it may not be sufficient for you to qualify to do business in Delaware, if you have a website or other link into the state, there might be privacy laws that are implicated as well, where you have to comply and do certain things from an internet or website basis. So just keep that in mind that there are different laws that could be applicable in addition to the doing business and the foreign qualification statutes. And with that, Miranda, do you have any comments?

Miranda: Well, yeah, just real quickly, I'll just let you know that what can make it easier for entities to qualify and adhere to these common requirements is when these agencies allow third parties, like CSC, to assist with things like obtaining that special license or permit or requesting approval. And here at CSC, we've really worked with our teams in building those relationships with these agencies and some local municipalities so that we have this working process in place where we can assist you in many cases.

Helena: I'm just going to kind of jump through a little bit of a recap over here for us. So we heard so many times today that the facts and circumstances are unique here. There is no cookie-cutter approach. You need to actually look at the individual state statutes and the case laws to determine whether or not you need to do a qualification over here. Every single state determines in it quickly or separately, differently on that qualification over there. To find out more about particular states, of course, you can reach out to counsel there. But then you have resources, such as CSC's book, law firms that make things available, such as materials about foreign qualification.