Out of Woods and into the Rules: The Relationship between State Foreign Corporation Door-Closing Statutes and Federal Rule of Civil Procedure 17(b)

• Published in: Virginia law review 1986-05, Vol.72 (4), p.767-809
• Main Author: Little, Laura E.
• Format: Article
• Language: English
• Subjects: Civil procedures; Companies; Corporate regulation; Corporations; Federal court decisions; Federal courts; Federal law; Federal legislation; Foreign; Jurisdiction; Legislation; Litigation; Rule of law; State court decisions; State law; State laws; State statutes; Statutory law; Supreme Court decisions
• ISSN: 0042-6601; 1942-9967
• DOI: 10.2307/1072910

In Woods versus Interstate Realty Co. (1949), the US Supreme Court held that a federal court exercising diversity jurisdiction must close its doors to an unregistered foreign corporation if the courts of the forum state would do so. Lower federal courts frequently have differed over the impact of Federal Rule of Civil Procedure 17(b), and recent Supreme Court decisions have been contrary to Woods. A survey of contemporary foreign corporation laws, a summary of the development of the rationale underlying Woods, and subsequent refinements of the doctrine from Erie Railroad Co. versus Tompkins (1938) indicate that Woods is irreconcilable with recent Supreme Court precedents and that lower federal courts have erred in addressing the issue. An alternative approach would give full effect to the congressional command of the Rules Enabling Act, providing interim relief where a foreign corporation door-closing statute is not intended to regulate a federal court's exercise of diversity jurisdiction. Long-term relief requires rejection of Woods by amendment to the Rule or via Supreme Court opinion.