In 1974, appellant, a Delaware corporation with its principal
place of business in Ohio, and appellee, an Illinois corporation
with its principal place of business in Illinois, entered into a
contract for appellee's delivery and installation of a boiler
system at appellant's Ohio facility. After a contract dispute
arose, appellant filed this diversity action in the Northern
District of Ohio in 1980. When appellee asserted the Ohio statute
of limitations as a defense, appellant responded that the
limitations period had not elapsed, because, under an Ohio statute,
the running of the time is tolled for claims against corporations
that are not present in the State and have not designated an agent
for service of process. The District Court dismissed the action,
finding that the Ohio tolling statute constituted an impermissible
burden on interstate commerce in violation of the Commerce Clause.
The Court of Appeals affirmed.
The Ohio tolling statute violates the Commerce
Clause, since it imposes an impermissible burden on interstate
commerce. To gain the protection of the limitations period,
appellee -- which has no corporate office in Ohio and is not
registered to do business there -- would have had to appoint a
resident agent for service of process in Ohio and subject itself to
the Ohio courts' general jurisdiction. Ohio's statutory scheme thus
forces a foreign corporation to choose between exposure to the
general jurisdiction of Ohio courts or forfeiture of the
limitations defense, remaining subject to suit in Ohio in
perpetuity. Although statute of limitations defenses are not a
fundamental right, they are an integral part of the legal system
and are relied upon to project the liabilities of persons and
corporations active in the commercial sphere. Such defenses may not
be withdrawn from out-of-state persons or corporations on
conditions repugnant to the Commerce Clause. The ability to execute
service of process on foreign corporations is an important factor
to consider in assessing the local interest in subjecting
out-of-state entities to requirements more onerous than those
imposed on domestic parties. However, Ohio cannot justify its
tolling statute as a means of protecting its residents from
corporations who become liable for acts done within the State but
later withdraw from the jurisdiction, for the parties concede that
the Ohio long-arm statute would have permitted service on
Page 486 U. S. 889
throughout the period of limitations. Moreover, the suggestion
that appellee had the simple alternatives of designating an agent
for service of process in its contract with appellant or tendering
an agency appointment to the Ohio Secretary of State is not
persuasive. Appellant's argument that a finding that the Ohio
statute is unconstitutional should be applied prospectively only,
and not to the parties in this case, will not be considered by this
Court, since the argument was not presented to the courts below.
Pp. 486 U. S.
820 F.2d 186, affirmed.
KENNEDY, J., delivered the opinion of the Court, in which
BRENNAN, WHITE, MARSHALL, BLACKMUN, STEVENS, and O'CONNOR, JJ.,
joined. SCALIA, J., filed an opinion concurring in the judgment.
REHNQUIST, C.J., filed a dissenting opinion.
JUSTICE KENNEDY delivered the opinion of the Court.
Ohio recognizes a 4-year statute of limitations in actions for
breach of contract or fraud. The statute is tolled, however, for
any period that a person or corporation is not "present" in the
State. To be present in Ohio, a foreign corporation must appoint an
agent for service of process, which operates as consent to the
general jurisdiction of the Ohio courts. Applying well settled
constitutional principles, we find the Ohio statute that suspends
limitations protection for out-of-state entities is a violation of
the Commerce Clause.
Underlying the constitutional question presented by the Ohio
statute of limitations rules is a rather ordinary contract dispute.
In 1974, Midwesco Enterprises, Inc., agreed with Bendix Autolite
Corporation to deliver and install a boiler system at a Bendix
facility in Fostoria, Ohio. Dissatisfied with the work, Bendix
claimed that the boiler system had
Page 486 U. S. 890
been installed improperly and that it was insufficient to
produce the quantity of steam specified in the contract. This
diversity action was filed against Midwesco in the United States
District Court for the Northern District of Ohio in 1980. Bendix is
a Delaware corporation with its principal place of business in
Ohio; Midwesco is an Illinois corporation with its principal place
of business in Illinois.
When Midwesco asserted the Ohio statute of limitations as a
defense, Bendix responded that the statutory period had not
elapsed, because, under Ohio law, running of the time is suspended,
or tolled, for claims against entities that are not within the
State and have not designated an agent for service of process.
] Midwesco replied
that this tolling provision violated both the Commerce Clause and
the Due Process Clause of the Fourteenth Amendment.
The District Court dismissed the action, finding that the Ohio
tolling statute constituted an impermissible burden on
Page 486 U. S. 891
interstate commerce. The Court of Appeals for the Sixth Circuit
affirmed, finding that the Ohio statute constituted discrimination
in violation of the Commerce Clause because it required a foreign
corporation to choose between
"'exposing itself to personal jurisdiction in [state] courts by
complying with the tolling statute, or, by refusing to comply, to
remain liable in perpetuity for all lawsuits containing state
causes of action filed against it in [the State].'"
820 F.2d 186, 188 (CA6 1987) (quoting McKinley v. Combustion
Engineering, Inc., 575 F.
, 945 (Idaho 1983)). The Court of Appeals rejected the
argument that an agent for service of process could have been
appointed by Midwesco either in the contract or by giving notice to
the Ohio Secretary of State. Bendix appealed, and we noted probable
jurisdiction to review the constitutionality of the Ohio tolling
statute. 484 U.S. 923 (1987). We now affirm.
Where the burden of a state regulation falls on interstate
commerce, restricting its flow in a manner not applicable to local
business and trade, there may be either a discrimination that
renders the regulation invalid without more or cause to weigh and
assess the State's putative interests against the interstate
restraints to determine if the burden imposed is an unreasonable
one. See Brown-Forman Distillers Corp. v. New York State Liquor
Authority, 476 U. S. 573
476 U. S.
-579 (1986). The Ohio statute before us might have
been held to be a discrimination that invalidates without extended
inquiry. We choose, however, to assess the interests of the State,
to demonstrate that its legitimate sphere of regulation is not much
advanced by the statute while interstate commerce is subject to
substantial restraints. We find that the burden imposed on
interstate commerce by the tolling statute exceeds any local
interest that the State might advance.
The burden the tolling statute places on interstate commerce is
significant. Midwesco has no corporate office in
Page 486 U. S. 892
Ohio, is not registered to do business there, and has not
appointed an agent for service of process in the State. To gain the
protection of the limitations period, Midwesco would have had to
appoint a resident agent for service of process in Ohio and subject
itself to the general jurisdiction of the Ohio courts. [Footnote 2
] This jurisdiction would
extend to any suit against Midwesco, whether or not the transaction
in question had any connection with Ohio. The designation of an
Page 486 U. S. 893
the foreign corporation to the general jurisdiction of the Ohio
courts in matters to which Ohio's tenuous relation would not
otherwise extend. Cf. World-Wide Volkswagen Corp. v.
Woodson, 444 U. S. 286
(1980). The Ohio statutory scheme thus forces a foreign corporation
to choose between exposure to the general jurisdiction of Ohio
courts or forfeiture of the limitations defense, remaining subject
to suit in Ohio in perpetuity. Requiring a foreign corporation to
appoint an agent for service in all cases and to defend itself with
reference to all transactions, including those in which it did not
have the minimum contacts necessary for supporting personal
jurisdiction, is a significant burden. See Asahi Metal Industry
Co. v. Superior Court, 480 U. S. 102
480 U. S. 114
Although statute of limitations defenses are not a fundamental
right, Chase Securities Corp. v. Donaldson, 325 U.
, 325 U. S. 314
(1945), it is obvious that they are an integral part of the legal
system and are relied upon to project the liabilities of persons
and corporations active in the commercial sphere. The State may not
withdraw such defenses on conditions repugnant to the Commerce
Clause. Where a State denies ordinary legal defenses or like
privileges to out-of-state persons or corporations engaged in
commerce, the state law will be reviewed under the Commerce Clause
to determine whether the denial is discriminatory on its face or an
impermissible burden on commerce. The State may not condition the
exercise of the defense on the waiver or relinquishment of rights
that the foreign corporation would otherwise retain. Cf.
Dahnke-Walker Milling Co. v. Bondurant, 257 U.
(1921); Allenberg Cotton Co. v. Pittman,
419 U. S. 20
The ability to execute service of process on foreign
corporations and entities is an important factor to consider in
assessing the local interest in subjecting out-of-state entities to
requirements more onerous than those imposed on domestic parties.
It is true that serving foreign corporate defendants may be more
arduous than serving domestic corporations or foreign corporations
with a designated agent for service, and
Page 486 U. S. 894
we have held for equal protection purposes that a State
rationally may make adjustments for this difference by curtailing
limitations protection for absent foreign corporations. G. D.
Searle & Co. v. Cohn, 455 U. S. 404
(1982). Nevertheless, state interests that are legitimate for equal
protection or due process purposes may be insufficient to withstand
Commerce Clause scrutiny. [Footnote
In the particular case before us, the Ohio tolling statute must
fall under the Commerce Clause. Ohio cannot justify its statute as
a means of protecting its residents from corporations who become
liable for acts done within the State but later withdraw from the
jurisdiction, for it is conceded by all parties that the Ohio
long-arm statute would have permitted service on Midwesco
throughout the period of limitations. The Ohio statute of
limitations is tolled only for those foreign corporations that do
not subject themselves to the general jurisdiction of Ohio courts.
In this manner, the Ohio statute imposes a greater burden on
out-of-state companies than it does on Ohio companies, subjecting
the activities of foreign and domestic corporations to inconsistent
regulations. CTS Corp. v. Dynamics Corp. of America,
481 U. S. 69
481 U. S. 87
The suggestion that Midwesco had the simple alternatives of
designating an agent for service of process in its contract with
Bendix or tendering an agency appointment to the Ohio Secretary of
State is not persuasive. Initially, there is no
Page 486 U. S. 895
statutory support for either option, and it is speculative that
either device would have satisfied the Ohio requirements for the
continued running of the limitations period. In any event, a
designation with the Ohio Secretary of State of an agent for the
service of process likely would have subjected Midwesco to the
general jurisdiction of Ohio courts over transactions in which Ohio
had no interest. As we have already concluded, this exaction is an
unreasonable burden on commerce.
Finally, Bendix argues that, if we find the Ohio statute is
unconstitutional, our ruling should be applied prospectively only,
and not to the parties in this case. See Chevron Oil Co. v.
Huson, 404 U. S. 97
404 U. S. 106
(1971); Northern Pipeline Construction Co. v. Marathon Pipe
Line Co., 458 U. S. 50
458 U. S. 88
(1982). The Sixth Circuit refused to consider the argument because
it was raised for the first time in Bendix's reply brief. 820 F.2d
at 189. As the argument was not presented to the courts below, it
will not be considered here. Brown v. Socialist Workers '74
Campaign Committee, 459 U. S. 87
459 U. S.
-105 (1982) (BLACKMUN, J., concurring in part).
Ohio Rev.Code Ann. § 2305.09 (1981) provides in pertinent
"An action for any of the following causes shall be brought
within four years after the cause thereof accrued:"
"* * * *"
"(C) For relief on the ground of fraud."
Ohio Rev.Code Ann. § 1302.98 (1979) provides in pertinent
"(A) An action for breach of any contract for sale must be
commenced within four years after the cause of action has accrued.
By the original agreement the parties may reduce the period of
limitation to not less than one year but may not extend it."
"(B) A cause of action accrues when the breach occurs,
regardless of the aggrieved party's lack of knowledge of the
Ohio Rev.Code Ann. § 2305.15 (Supp.1987) provides:
"When a cause of action accrues against a person, if he is out
of the state, has absconded, or conceals himself, the period of
limitation for the commencement of the action as provided in
sections 2305.04 to 2305.14, 1302.98, and 1304.29 of the Revised
Code, does not begin to run until he comes into the state or while
he is so absconded or concealed. After the cause of action accrues
if he departs from the state, absconds, or conceals himself, the
time of his absence or concealment shall not be computed as any
part of a period within which the action must be brought."
Ohio Rev. Code Ann. § 2307.38.2 (1981) provides in pertinent
"(A) A court may exercise personal jurisdiction over a person
who acts directly or by an agent, as to cause an action arising
from the person's:"
"(1) Transacting any business in this state;"
"(2) Contracting to supply services or goods in this state;"
"(3) Causing tortious injury by act or omission in this
"* * * *"
"(B) When jurisdiction over a person is based solely upon this
section, only a cause of action arising from acts enumerated in
this section may be asserted against him."
Ohio Rev.Code Ann. § 1703.04.1 (1985), provides in pertinent
"(A) Every foreign corporation for profit that is licensed to
transact business in this state, and every foreign nonprofit
corporation that is licensed to exercise its corporate privileges
in this state, shall have and maintain an agent, sometimes referred
to as the 'designated agent,' upon whom process against such
corporation may be served within this state. . . ."
"* * * *"
"(H) Process may be served upon a foreign corporation by
delivering a copy of it to its designated agent, if a natural
person, or by delivering a copy of it at the address of its agent
in this state, as such address appears upon the record in the
office of the secretary of state."
"(I) This section does not limit or affect the right to serve
process upon a foreign corporation in any other manner permitted by
In part to comply with Commerce Clause concerns, Ohio Rev.Code
Ann. § 1703.02 (1985), exempts corporations engaged solely in
interstate commerce from the registration requirement:
"Sections 1703.01 to 1703.31, inclusive, of the Revised Code do
not apply to corporations engaged in this state solely in
interstate commerce, including the installation, demonstration, or
repair of machinery or equipment sold by them in interstate
commerce. . . ."
Section 1703.02 does not, however, remove foreign corporations
from the reach of the tolling provision.
we declined to reach the issue of whether
the New Jersey tolling statute impermissibly burdened interstate
commerce, finding that the issue was "clouded by an ambiguity in
state law," and remanded the case to the Court of Appeals. 455 U.S.
at 455 U. S.
-414. The Court of Appeals then remanded to the
District Court "for further consideration of the Commerce Clause
issue." Hopkins v. Kelsey-Hayes, Inc.,
677 F.2d 301, 302
(CA3 1982). Before the District Court ruled, however, the New
Jersey Supreme Court declared its tolling statute unconstitutional
under a Commerce Clause analysis as a forced licensure provision, a
decision we declined to review. Coons v. American Honda Motor
94 N.J. 307, 463 A.2d
(1983), cert. denied, 469 U.
JUSTICE SCALIA, concurring in judgment.
I cannot confidently assess whether the Court's evaluation and
balancing of interests in this case is right or wrong. Although the
Court labels the effect of exposure to the general jurisdiction of
Ohio's courts "a significant burden" on commerce, I am not sure why
that is. In precise terms, it is the burden of defending in Ohio
(rather than some other forum) any lawsuit having all of the
following features: (1) the plaintiff desires to bring it in Ohio,
(2) it has so little connection to Ohio that service could not
otherwise be made under Ohio's long-arm statute, and (3) it has a
great enough connection to Ohio that it is not subject to dismissal
on forum non conveniens
grounds. The record before us
supplies no indication as to how many suits fit this description
Page 486 U. S. 896
present suit is not an example, since appellee was subject to
long-arm service, ante
at 894), and frankly I have no idea
how one would go about estimating the number. It may well be
"significant," but, for all we know, it is "negligible."
A person or firm that takes the other alternative, by declining
to appoint a general agent for service, will remain theoretically
subject to suit in Ohio (as the Court says) "in perpetuity" -- at
least as far as the statute of limitations is concerned. But again,
I do not know how we assess how significant a burden this is,
unless anything that is theoretically perpetual must be
significant. It seems very unlikely that anyone would intentionally
wait to sue later, rather than sooner -- not only because the
prospective defendant may die or dissolve, but also because
prejudgment interest is normally not awarded, and the staleness of
evidence generally harms the party with the burden of proof. The
likelihood of an unintentionally delayed suit brought under this
provision that could not be brought without it seems not enormously
large. Moreover, whatever the likelihood is, it does not seem
terribly plausible that any real-world deterrent effect on
interstate transactions will be produced by the incremental cost of
having to defend a delayed suit, rather than a timely
suit. But the point is, it seems to me we can do no more than
On the other side of the scale, the Court considers the benefit
of the Ohio scheme to local interests. These are, presumably, to
enable the preservation of claims against defendants who have
placed themselves beyond the personal jurisdiction of Ohio courts,
and (by encouraging appointment of an agent) to facilitate service
upon out-of-state defendants who might otherwise be difficult to
locate. See G. D. Searle & Co. v. Cohn, 455 U.
, 455 U. S. 410
(1982) (it is "a reasonable assumption that unrepresented foreign
corporations, as a general rule, may not be so easy to find and
serve"). We have no way of knowing how often these ends are in fact
Page 486 U. S. 897
and the Court thus says little about them except to call them
"an important factor to consider." Ante
at 486 U. S.
Having evaluated the interests on both sides as roughly as this,
the Court then proceeds to judge which is more important. This
process is ordinarily called "balancing," Pike v. Bruce Church,
Inc., 397 U. S. 137
397 U. S. 142
(1970), but the scale analogy is not really appropriate, since the
interests on both sides are incommensurate. It is more like judging
whether a particular line is longer than a particular rock is
heavy. All I am really persuaded of by the Court's opinion is that
the burdens the Court labels "significant" are more determinative
of its decision than the benefits it labels "important." Were it
not for the brief implication that there is here a discrimination
unjustified by any state interest, see ante
486 U. S. 894
I suggest an opinion could as persuasively have been written coming
out the opposite way. We sometimes make similar "balancing"
judgments in determining how far the needs of the State can intrude
upon the liberties of the individual, see, e.g., Boos v.
Barry, 485 U. S. 312
485 U. S. 324
(1988), but that is of the essence of the courts' function as the
nonpolitical branch. Weighing the governmental interests of a State
against the needs of interstate commerce is, by contrast, a task
squarely within the responsibility of Congress, see
U.S.Const., Art. I, § 8, cl. 3, and "ill-suited to the judicial
function." CTS Corp. v. Dynamics Corp. of America,
481 U. S. 69
481 U. S. 95
(1987) (SCALIA, J., concurring in part and concurring in
I would therefore abandon the "balancing" approach to these
negative Commerce Clause cases, first explicitly adopted 18 years
ago in Pike v. Bruce Church, Inc., supra,
essentially legislative judgments to the Congress. Issues already
decided I would leave untouched, but would adopt for the future an
analysis more appropriate to our role and our abilities. This does
no damage to the interests protected by the doctrine of stare
Since the outcome of any particular still-undecided
issue under the current
Page 486 U. S. 898
methodolgy is, in my view, not predictable -- except within the
broad range that would in any event come out the same way under the
test I would apply -- no expectations can possibly be upset. To the
contrary, the ultimate objective of the rule of stare
will be furthered. Because the outcome of the test I
would apply is considerably more clear, confident expectations will
more readily be able to be entertained.
In my view, a state statute is invalid under the Commerce Clause
if, and only if, it accords discriminatory treatment to interstate
commerce in a respect not required to achieve a lawful state
purpose. When such a validating purpose exists, it is for Congress,
and not us ,to determine it is not significant enough to justify
the burden on commerce. The Ohio tolling statute, Ohio Rev.Code
Ann. § 2305.15 (Supp.1987), is on its face discriminatory, because
it applies only to out-of-state corporations. That facial
discrimination cannot be justified on the basis that "it advances a
legitimate local purpose that cannot be adequately served by
reasonable nondiscriminatory alternatives," New Energy Co. of
Indiana v. Limbach, ante
at 486 U. S. 278
A tolling statute that operated only against persons beyond the
reach of Ohio's long-arm statute, or against all persons that could
not be found for mail service, would be narrowly tailored to
advance the legitimate purpose of preserving claims; but the
present statute extends the time for suit even against corporations
which (like appellee) are fully suable within Ohio, and readily
reachable through the mails.
Because the present statute discriminates against interstate
commerce by applying a disadvantageous rule against nonresidents
for no valid state purpose that requires such a rule, I concur in
the judgment that the Ohio statute violates the Commerce
CHIEF JUSTICE REHNQUIST, dissenting.
This case arises because of two peculiar, if not unique, rules
of Ohio law. The first is that, even though a foreign corporation
may be subject to process under the state "long-arm"
Page 486 U. S. 899
statute, it is nonetheless not "present" in the State for
purposes of tolling the statute of limitations. The second is that
a foreign corporation installing machinery or equipment sold by it
in interstate commerce is not required to appoint a statutory agent
in order to transact business in Ohio. Ohio Rev.Code § 1703.02
(Supp.1987). The Court dwells heavily upon the first peculiarity of
Ohio law, but makes no mention of the second.
Midwesco agreed to deliver and install a boiler system at a
Bendix plant in Fostoria, Ohio. On the basis of the sparse record
before us, it is fair to say that, while the sale may have been a
transaction in interstate commerce, there is no reason at all to
think that the installation was such. Cases such as Allenberg
Cotton Co. v. Pittman, 419 U. S. 20
(1974), and Datanke-Walker Milling Co. v. Bondurant,
257 U. S. 282
(1921), on which the Court relies, deal with transactions
respecting goods which are "in the stream of interstate commerce."
419 U.S. at 419 U. S. 30
State may not require licensure of a foreign corporation which
seeks only to engage in this sort of transaction. But a State may
require licensure when a foreign corporation engages in intrastate
commerce. Eli Lilly & Co. v. Sav-On-Drugs, Inc.,
366 U. S. 276
(1961). And where a foreign corporation is engaged in both
interstate and intrastate commerce in a particular commodity, a
State may require licensure in order to sue in connection with an
intrastate aspect of the business. Union Brokerage Co. v.
Jensen, 322 U. S. 202
Thus, Midwesco's immunity from Ohio's requirement that foreign
corporations appoint a statutory agent before doing business in the
State is not by reason of any federal constitutional right, but by
reason of a provision of the Ohio statutes. And if Ohio could have
insisted that Midwesco appoint a statutory agent before it engaged
in that portion of its transaction with Bendix which was intrastate
commerce, I see no reason why it may not also treat Midwesco as it
would treat any other entity which has done intrastate business in
Page 486 U. S. 900
incurred liability, and thereafter withdrawn from the State.
Ohio seeks to do no more, I think, when it applies its tolling
statute to Bendix's action against Midwesco under these
circumstances. I see no discrimination against interstate commerce
here, and I would reverse the judgment of the Court of Appeals.