Legal Alert: US Supreme Court, Again, Limits General Jurisdiction Over Out-of-State Corporations
In BNSF Railway Co. v. Estate of Brent Tyrrell, -- S.Ct. – (May 30, 2017), the U.S. Supreme Court held that BNSF Railway Co., with over 2,000 employees and 2,000 miles of track in Montana is not subject to general jurisdiction in Montana because it is not ‘at home’ in the state. This decision, which comes on the heels of Daimler and Goodyear, severely limits general jurisdiction over corporations in states outside the corporation’s state of incorporation or principal place of business.
In BNSF Railway Co., the decedent’s wife alleged that the decedent developed a fatal kidney cancer from his exposure to chemicals while working for BNSF. The decedent, however, never worked for BNSF in Montana and the estate never alleged injuries arising from or related to work performed in Montana. Nonetheless, the plaintiffs filed suit in Montana. Because the decedent’s work and alleged injuries had no connection with Montana, the Court looked to the principles of general jurisdiction and analyzed whether BNSF’s contacts with Montana were ‘continuous and systematic’ so as to render them essentially at home in Montana.
First, the Court noted that the general jurisdiction principles laid out in Daimler AG v. Bauman, 134 S. Ct. 746, 754 (2014), apply to all state-court assertions of general jurisdiction over nonresident defendants and do not vary based on the type of claim asserted or type of corporation sued. This clarification will provide relief to all corporations sued in jurisdictions other than their place of incorporation or principal place of business and where there is no specific personal jurisdiction (where the defendant’s “suit related conduct” creates “a substantial connection with the forum state”). Under Daimler, general jurisdiction may only be exercised over a corporation where it has such “continuous and systematic” contacts as to “render [it] essentially at home in the forum state.”
Next, the Court held that BNSF was not ‘at home’ in Montana so as to subject them to general jurisdiction in Montana. Even though BNSF has over 2,000 employees and maintains 2,000 miles of track in Montana, this contact was minor relative to BNSF’s activities in their entirety. The Court again noted that “a corporation that operates in many places can scarcely be deemed at home in all of them.” (citing Daimler). Thus, while the business BNSF does in Montana could subject them to claims in Montana related to their Montana business, in-state business alone is not sufficient to permit the assertion of general jurisdiction over claims unrelated to any activity in Montana.
In light of the Court’s holding in BNSF Railway Co., corporations operating in numerous states should be cognizant of significant jurisdictional defenses when hauled before an out-of-state court on claims wholly unrelated to their business in that state.