E-Alert Case Updates
United States Supreme Court Denies Expansion of “At Home” Personal Jurisdiction Over Out of State Defendants
BNSF Railway Co. v. Tyrrell
The United States Supreme Court overturned a decision by the Montana Supreme Court finding that Montana courts had general personal jurisdiction over an out of state defendant, BNSF Railway Company (BNSF).
The case arose under § 56 of the Federal Employers’ Liability Act (FELA) which “makes railroads liable in money damages to their employees for on-the-job injuries.” The two plaintiffs in the case worked for BNSF, but did not do any work for BNSF in Montana. Relying on the first two sentences of FELA, the Montana Supreme Court misinterpreted the statute by holding that it granted general personal jurisdiction over BNSF.
The first sentence of § 56 states that “‘an action may be brought in a district court of the United States,’ in, among other places, the district ‘in which the defendant shall be doing business at the time of commencing such action.’” The Supreme Court candidly stated that the Court has always read this sentence as establishing venue for a federal court action: it has never applied to personal jurisdiction. According to the Court, Congress typically writes statutes granting personal jurisdiction by authorizing “service of process.” Absent this phrase or consent by the defendant, there cannot be personal jurisdiction since service is a “prerequisite to the exercise of personal jurisdiction.”
The second sentence of § 56 states that the “jurisdiction of the courts of the United States under this chapter shall be concurrent with that of the courts of the several States.” The Montana Supreme Court interpreted this sentence to expand the personal jurisdiction, allegedly granted in the first sentence to federal courts, to state courts as well. Giving credit to Justice McKinnon, who wrote a dissenting opinion in the Montana Supreme Court decision, the Court quotes, “‘[t]he phrase ‘concurrent jurisdiction’ is a well-known term of art long employed by Congress and courts to refer to subject-matter jurisdiction, not personal jurisdiction.’”
Citing outdated authority, the Montana Supreme Court misinterpreted precedent. The Untied States Supreme Court clarified by stating that the issue in Denver & Rio Grande Western R. Co. v. Terte, 284, U.S. 284 (1932), had to do with the Dormant Commerce Clause, not personal jurisdiction. Further clarifying, the Court stated that Baltimore & Ohio R. Co. v. Kepner, 314 U.S. 44 (1941), and Miles v. Illinois Central R. Co., 315 U.S. 698 (1942), held that a “state court may not, based on inconvenience to a railroad defendant, enjoin its residents from bringing a FELA suit in another State’s federal (Kepner) or state (Miles) courts,” and that Pope v. Atlantic Coast Line R. Co., 345 U.S. 379 (1953), determined that 28 U.S.C. § 1404(a) still meant that a State could not enjoin a FELA action in another State. Furthermore, all of these decisions were decided before the landmark decision of International Shoe Co. v. Washington, 326 U.S. 310 (1945).
Since FELA does not grant personal jurisdiction, the Montana Supreme Court asserted that its Rules of Civil Procedure granted personal jurisdiction over “‘persons found’ in Montana.” Montana state courts have interpreted the phrase “found within” to mean parties doing business in Montana: BNSF did not contest that it would be “found within” Montana under the State’s interpretation of Mont. Rule Civ. Proc. 4(b)(1). However, exercising personal jurisdiction over a defendant must still pass muster under the Due Process Clause of the Fourteenth Amendment.
A corporation can traditionally be subject to general personal jurisdiction where it is incorporated, and where its primary place of business is. A third theory has rarely found success in the courts, the “at home” theory. See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011); see also Daimler AG v. Bauman 571 U.S. __ (2014). Only in Perkins v. Benguet Consol. Mining Co., 342 U.S. 437 (1952), did the Supreme Court find that the corporation’s “‘affiliations with the State [were] so ‘continuous and systematic’ as to render them essentially at home in the forum State.’” In Perkins, the corporation was forced to move the entire enterprise from the Philippines to Ohio because of war.
Another method for a forum State to have jurisdiction over a defendant is through the minimum contacts test established in International Shoe. For a State to have specific personal jurisdiction over an out of state defendant, the defendant must have (1) constitutionally cognizable contacts with the forum state, (2) the claim must arise out of those contacts, and (3) it must be reasonably foreseeable that the defendant could be haled into the forum. International Shoe distinguishes specific personal jurisdiction from general personal jurisdiction.
“BNSF is incorporated in Delaware and has its primary place of business in Texas.” BNSF is not subject to general personal jurisdiction through incorporation or its primary place of business. Both plaintiffs were injured while working for BNSF outside of Montana. Since the claims do not arise out of BNSF’s contacts with Montana, Montana does not have specific personal jurisdiction under the minimum contacts test. In order for Montana to have personal jurisdiction over BNSF, BNSF’s contacts must be so continuous and systematic as to render it “at home” in Montana.
“BNSF has 2,061 miles of railroad track in Montana (about 6% of its total track mileage of 32,500), employs some 2,100 workers there (less than 5% of its total work force of 43,000), generates less than 10% of its total revenue in the State, and maintains only one of its 24 automotive facilities in Montana (4%).” BNSF’s minimal amount of business within Montana is not nearly continuous and systematic enough to render it “at home” in Montana. Although the Supreme Court maintains that the “at home” theory of general personal jurisdiction is still valid, it refuses to expand it outside of the Perkins situation.
|©2008 Maryland Defense Counsel, Inc. All Rights Reserved.|