Corporate Defendants Win in Supreme Court Ruling on Jurisdiction for Out-of-State Plaintiffs

Reversing the Montana Supreme Court, the US Supreme Court decided BNSF Railway Co. v. Tyrrell, No. 16-405, on May 30, 2017, holding that a state court cannot assert jurisdiction over claims made by nonresident plaintiffs who were injured while working outside the state.

The US Supreme Court sided with defendant BNSF Railway Co., saying that such lawsuits must be filed in the state where the employee is “at home” — where it is incorporated or headquartered.

The justices ruled that §56 of the Federal Employers’ Liability Act (FELA) does not address personal jurisdiction and thus limiting the courts in which a railroad is subject to suit.

Daimler ruling applies

Importantly, the Court ruled that state courts must follow its 2014 ruling in Daimler AG v. Bauman, 134 S. Ct. 746, that the due process clause forbids a state court from exercising general personal jurisdiction. This broad interpretation affects another appeal filed by Bristol-Meyers Squibb, which desperately wants the US Supreme Court to reverse the California Supreme Court court, and to apply the Daimler rulingwhich states may take “general jurisdiction” only over companies that are “at home” in the state.

“Daimler involved no FELA claim or railroad defendant, but the due process constraint described there applies to all state-court assertions of general jurisdiction over nonresident defendants; that constraint does not vary with the type of claim asserted or business enterprise sued. Here, BNSF is not incorporated or headquartered in Montana and its activity there is not ‘so substantial and of such a nature as to render the corporation at home in that State,’” the Court ruled. (Emphasis added.)

Whether a court can take personal jurisdiction is a frequent legal issue in mass tort litigation. See GSK Asks Supreme Court to Let it Wriggle Out of Jurisdiction in Paxil Birth Defect Case and
US Supreme Court to Rule on California State Jurisdiction Over Plavix Litigation

Under FELA, railroads are liable to employees for injuries they suffer on the job. In this case, plaintiffs who lived outside Montana and had suffered injuries outside Montana sued BNSF Railway Company in Montana under FELA. BNSF did business in Montana but was incorporated and had its principal place of business elsewhere.

Because the railroad has 2,000 miles of track and more than 2,000 employees in the state, the Montana Supreme Court upheld personal jurisdiction over BNSF under FELA §56, which states that a cause of action may be brought in a district “in which the defendant shall be doing business at the time of commencing such action” and further provides that the jurisdiction of the federal courts is concurrent with that of the state courts.

Principles of personal jurisdiction

The Supreme Court held that §56 does not address personal jurisdiction but rather is a venue provision that also clarifies that state courts have subject matter jurisdiction over FELA claims. Therefore, Section 56 alone did not establish a basis to summon BNSF into court in Montana.

Turning to ordinary principles of personal jurisdiction, the Court reasserted the holdings in Daimler AG v. Bauman, and Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011), that courts may assert general jurisdiction over corporations only when they are essentially “at home” in the forum state.

Rejecting the Montana Supreme Court’s suggestion that Daimler was distinguishable from this case involving a FELA claim against a railroad, the Court emphasized that “[t]he Fourteenth Amendment due process constraint described in Daimler . . . applies to all state-court assertions of general jurisdiction over nonresident defendants; the constraint does not vary with the type of claim asserted or business enterprise sued.”

Because BNSF was not incorporated in Montana and did not maintain its principal place of business there, it was not subject to general personal jurisdiction in Montana. The Court said BNSF’s presence and activities in Montana do not support personal jurisdiction for unrelated claims like those of the plaintiffs, which had “no relationship to anything that occurred or had its principal impact in Montana.”

Justice Ginsburg delivered the opinion of the Court, joined by Chief Justice Roberts and Justices Kennedy, Thomas, Breyer, Alito, Kagan, and Gorsuch. Justice Sotomayor filed an opinion concurring in part and dissenting in part.

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