March 3, 2017 / 8:18 PM / 5 months ago

Missouri, Oregon top courts side with out-of-state defendants, reject jurisdiction

6 Min Read

(Reuters) - On April 25, the U.S. Supreme Court will hear oral arguments in BNSF Railway v. Tyrrell, the latest in a recent string of cases to consider general jurisdiction for suits against multistate and multinational corporations. As you probably recall, the Supreme Court’s 2014 decision in Daimler v. Bauman, building on the court’s 2011 ruling in Goodyear v. Brown, mostly restricted general jurisdiction for out-of-state plaintiffs to states in which the defendant's business is incorporated or headquartered. (The court left a bit of wiggle room in Daimler for “exceptional” cases, although its example was truly exceptional: Ohio was deemed in a 1952 Supreme Court decision to have jurisdiction over a Philippines-based company because war drove the company temporarily to base operations in Ohio.)

Since Daimler, federal circuits have broadly held that courts do not have general jurisdiction against corporations just because companies do substantial business in their states. But last May, the Montana Supreme Court carved out an exception to Daimler’s restrictions in the Tyrrell case, which involves workplace injury claims by two out-of-state employees of BNSF Railway, which is incorporated in Delaware and headquartered in Texas. Montana decided it had jurisdiction because BNSF was doing business in Montana under the Federal Employers Liability Act. (It also said Daimler applied only to corporations based outside of the U.S.)

The railroad, represented by Gibson Dunn & Crutcher, said in its Feb. 27 merits brief that the Montana Supreme Court misinterpreted Daimler and violated the company’s Fourteenth Amendment due process rights. The employees’ lawyers at the Public Citizen Litigation Group haven’t yet responded. There are also likely to be amicus briefs filed in the case, since the Chamber of Commerce and the National Association of Manufacturers, among others, backed the railroad’s petition for certiorari.

Judging by a pair of decisions this week from two other state supreme courts, Public Citizen will have its hands full defending the Montana Supreme Court’s ruling. On Feb. 28, the Missouri Supreme Court held in Norfolk Southern v. Dolan that under Daimler, Missouri does not have jurisdiction over the Virginia-based railroad, despite arguments by an out-of-state personal injury plaintiff that Norfolk Southern has conducted “substantial and continuous business” in Missouri. Daimler, according to the Missouri decision, expressly rejected that argument.

The Oregon Supreme Court’s decision in Barrett v. Union Pacific has a more thorough discussion of Daimler, its U.S. Supreme Court predecessors and its subsequent interpretation by other courts. This case before the en banc Oregon court closely parallels the BNSF case before the U.S. Supreme Court. A machine operator who allegedly suffered work-related injuries in Idaho sued the Nebraska-based and Delaware incorporated Union Pacific in Oregon, alleging liability under the Federal Employers Liability Act. The plaintiff, according to the Oregon Supreme Court opinion by Justice Rives Kistler, did not explain why he sued in Oregon, but argued that Oregon has general jurisdiction both under FELA and because Union Pacific “has been engaged in business in Oregon on an ongoing basis for a substantial period of time.”

The state Supreme Court looked first at Daimler, concluding that the U.S. Supreme Court’s opinion foreclosed the plaintiffs’ argument for jurisdiction based on Union Pacific’s continuous and significant business in Oregon. “To paraphrase the court’s reasoning in Daimler, if Oregon can exercise general jurisdiction over Union Pacific because that company’s activities in this state are substantial and continuous, then every state in which Union Pacific has engaged in similar activities can assert general jurisdiction over it, and the Court was clear that a rule of decision that results in multiple jurisdictions simultaneously asserting general jurisdiction over an out-of-state defendant is at odds with the Due Process Clause,” the Oregon opinion said.

The Oregon justices concluded that Daimler erased precedent interpreting FELA to confer general jurisdiction to any state in which a railroad operated. It also said no provisions in the statute itself give Oregon general jurisdiction – as opposed to subject matter jurisdiction – over claims. The court explicitly rejected the reasoning of the Montana justices in the BNSF case, citing instead post-Daimler opinions from the 2nd, 7th and 9th U.S. Circuit Courts of Appeal holding that corporate business within a state “is not sufficient in and of itself to give that state general jurisdiction over the corporation.”

BNSF is only one of the corporate venue cases before the U.S. Supreme Court this term. As Tony Mauro has reported for Law.com, the justices are also considering TC Heartland v. Kraft Foods Group, which addresses alleged forum-shopping in patent litigation, and Bristol-Myers Squibb v. Superior Court of California, which involves a California Supreme Court decision allowing out-of-state residents to participate, via specific jurisdiction, in a state-court personal injury class action.

Daimler, in other words, is going to get a workout from the justices in the next few months. If they take a hint from their state court counterparts in Oregon and Missouri, that will be good news for corporate defendants.

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