LEGAL
At the end of May, the Supreme Court issued its ruling in BNSF Railway Co. v. Tyrrell, resolving jurisdictional questions for a railroad company sued by employees who were injured while working for the railway. As inconsequential as such a case may first appear, the decision instead is quite significant for all corporations – not just those in rail transportation.
This is because the Court expanded on its 2014 Daimler AG v. Bauman decision, which narrowed the scope of state general jurisdiction over corporations. BNSF, then, further limits the jurisdictions in which corporations may be sued.
Two plaintiffs, Robert Nelson of North Dakota and Kelli Tyrrell, sued BNSF for injuries sustained while on the job as BNSF employees. (Tyrrell sued as administrator of her husband Brent Tyrrell's estate, claiming her husband died of cancer that developed from exposure to carcinogenic chemicals while working for BNSF.)
Both plaintiffs sued BNSF in Montana, though neither lived nor were injured in the state, citing the Federal Employers' Liability Act (FELA) and Montana Rules of Civil Procedure Rule 4(b)(1) to claim personal jurisdiction over BNSF.
The Court quickly dispensed with the jurisdictional claims relating to FELA, which holds railroads liable to their employees for on-the-job injuries, finding that the law only pertained to venue and subject matter jurisdiction for these claims, not personal jurisdiction.
For non-railroad companies, this conclusion likely has no effect.
Unlike the FELA ruling, however, the Court’s decision on the Montana rule was not so narrow in its impact. The Montana rule in question allows its state courts to exercise jurisdiction over any “person” – broadly defined enough to include nearly any individual or entity, natural or fictitious – “found” within the state.
The Court similarly quickly dispensed of any claims of personal jurisdiction over BNSF under the Montana rule. Although the majority admitted that the state rule, as written, would likely give Montana state courts personal jurisdiction over BNSF, such a finding would run afoul of the Fourteenth Amendment’s Due Process Clause. Citing Daimler, the Court noted that a corporation may only be sued in states where it is “at home,” which are almost always the corporation’s place of incorporation and its principal place of business. In a third “exceptional case,” Daimler allows corporations to be sued in a state forum where the corporation’s operations “may be so substantial and of such a nature as to render the corporation at home in that State.”
BNSF is incorporated in Delaware and has its principal place of business in Texas, so, according to the Court, the company would need to meet the requirements of this “exceptional case” for Montana to be able to claim general personal jurisdiction.
And these requirements went unmet, according to the Court.
The majority noted that the railway only had a small portion of its total operations – less than 5 percent of its work force and about 6 percent of its total track mileage – in Montana.
This did not make BNSF “at home” in the state, the Court said, and thus Montana lacked general personal jurisdiction over the company in the matter.
In a lone dissent, Justice Sonia Sotomayor lamented the Court’s continuation down the path first begun in Daimler, and instead called on the Court to adhere more faithfully to International Shoe Co. v. Washington.
International Shoe is a 1945 SCOTUS decision that gives a forum state personal jurisdiction over a corporation if its affiliations with the state are sufficiently “continuous and systematic” to warrant jurisdiction.
BNSF would have certainly qualified under that standard, even though it escaped Montana’s jurisdictional reach in the present case.
The way that the Court worded its opinion, Sotomayor says, the exceptional case would rarely, if ever, exist for any large corporation.
In fact, Sotomayor claims that it is “virtually inconceivable” that large multistate or multinational corporations could ever be subject to general jurisdiction anywhere besides their state of incorporation or principal place of business.
Whether Sotomayor is correct in her assessment remains to be seen, but the ruling is an undeniable and substantial diminution of state general jurisdictional reach.
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