Doing Business in Another State? Here’s Why Foreign Qualification Matters

By Eric Geringswald | CSC

Companies doing business in a foreign state need to carefully consider whether to qualify there. Failure to do so could scuttle a deal, keep the company from enforcing a contract, or from bringing a lawsuit. It could also lead to significant fines, and, in a few states, even prison time.

The Henrietta Lacks Case: A Cautionary Tale in Corporate Compliance

The following excerpt from the 2025 edition of CSC’s Qualifying to Do Business in Another State: The CSC 50-State Guide to Qualification illustrates one such risk for companies who fail to qualify.

In 1951, a Baltimore doctor harvested cancer cells from a patient without her knowledge or consent. The patient, Mrs. Henrietta Lacks, died soon after the procedure, but her cells were replicated and shared with the international research community and have been immortalized as a critical component of numerous medical breakthroughs. 

Although neither Mrs. Lacks nor her family were told about this legacy, her story eventually became public, and has been the subject of articles, a book, and a film by Oprah Winfrey. 

And now, Henrietta Lacks’ story is the subject of a lawsuit that could hinge on the question of qualification. 

In 2024, Mrs. Lacks’ grandson filed a lawsuit in Maryland against Ultragenyx, a biopharmaceutical company that he claims has been unjustly profiting from his grandmother’s replicated cells to develop therapies for rare diseases. Ultragenyx is incorporated in Delaware with headquarters in California. 

Ultragenyx argued that Lacks’ claim should be dismissed because Maryland has a three-year statute of limitations and Lacks filed his claim after the statute of limitations had passed. 

However, Lacks contended that because Ultragenyx failed to qualify as a foreign corporation to do business in Maryland, it has no right to the protections of the three-year statute of limitations. 

The court denied Ultragenyx’s motion to dismiss, so the company filed a motion for judgment on the pleadings, challenging the constitutionality of the Maryland Courts and Judicial Proceedings (Code § 5-204), which states that a foreign corporation can’t benefit from Maryland’s statute of limitations if it fails to qualify or register to do business in the state. 

On March 4, 2025, the U.S. District Court for the District of Maryland denied Ultragenyx’s motion for judgment on the pleadings, finding the Maryland statute constitutional and ruling that the case would proceed to discovery to determine whether Ultragenyx was required to register as a foreign corporation in Maryland and had failed to do so.[1] 

If a court ultimately determines that the biopharmaceutical company was doing business in Maryland and failed to qualify, the family of Henrietta Lacks will have their day in court, and Ultragenyx could potentially face a judgment for millions of dollars.

Understanding State Statutes and the Statute of Limitations

Qualifying to Do Business in Another State: The CSC 50-State Guide to Qualification is a comprehensive toolbox to help business and legal professionals better understand foreign qualifications and avoid the consequences of failing to qualify. Using case illustrations, the book provides insight and analysis of the types of activities that do and do not trigger the qualification requirement

The book explores the Model Business Corporation Act (MBCA), which serves as a template for most states’ laws governing foreign corporations’ business activities within their borders. It examines the activities listed in the MBCA that are not subject to regulation, and the activities that require a foreign corporation to register to do business. There is also a discussion of how internet and e-commerce activity could trigger qualification requirements, and a look at the consequences of doing business without qualifying.

Key Features of the CSC 50-State Guide to Qualification

Step-by-step instructions are provided for qualifying to do business in foreign states, as well as registration procedures for charitable organizations.

The book also includes a comprehensive scope of annotated qualification statutes for all jurisdictions, giving legal practitioners easy access to the current statutes and relevant case notes that relate to doing business in a foreign state. Statutes have been updated for the 2024 Edition.

Two charts summarize the activities that do not constitute doing business and the consequences of failing to qualify. Both charts are up-to-date and include comments and statutory citations

The guide also includes online access to qualification forms for all U.S. jurisdictions via the LexisNexis^® Store download center. The forms appendix provides a complete listing of forms and contact information for each jurisdiction's Secretary of State or equivalent agency.

The 2025 Edition of Qualifying to do Business in Another State is available as a softbound book or as an eBook, compatible with dedicated eReader devices, computers, tablets and smartphones that use eReader software or applications. It is also available on the LexisNexis^® Digital Library.

To learn more about the 2025 Edition of Qualifying to do Business in Another State, call 1.800.533.1637 or visit us online at www.lexisnexis.com/csc.

[1] Lacks v. Ultragenyx Pharm., Inc., 2025 U.S. Dist. LEXIS 36955 (D. Md. Mar. 3, 2025).