In the recent decision in BNSF Railway Co. v. Tyrrell, the United States Supreme Court further confirmed that states lack the power to hail foreign corporations, even those conducting substantial business within a state, to court as defendants for allegations unrelated to that corporation’s activities in the forum state. Affirming and expanding on its landmark holding in Daimler, the Court reversed the exercise of general jurisdiction by Montana over a foreign corporation railroad. Click here for the Court’s Opinion.
The plaintiffs/appellees brought a Federal Employer’s Liability Act (“FELA”) lawsuit in Montana state court for alleged on-the-job injuries sustained in North Dakota. The Montana court exercised general personal jurisdiction over defendant/appellant BNSF, a Delaware corporation headquartered in Texas, pursuant to two rules. First it applied FELA section 56 which it held authorizes personal jurisdiction over railroads “doing business” in the state. Second, it applied Montana Civil Procedure Rule 4(b)(1) which permitted the exercise of personal jurisdiction over any “person found within . . . Montana.” The state court found that BNSF had over 2,000 miles of track and 2,000 workers located in Montana, representing approximately 5-6% of BNSF’s overall business, and was therefore “found within” and “doing business in” Montana.
The Supreme Court found it was improper for Montana to exercise jurisdiction over BNSF. As to FELA section 56, the Court held that the language stating that “an action may be brought in a district court” with “concurrent jurisdiction” to state courts only confers venue and subject matter jurisdiction on federal courts and does not authorize the exercise of general personal jurisdiction.
As to the Montana rule purporting to extend general jurisdiction over any corporation “found within” Montana, BNSF admitted that its railroad could be “found within” the state under the rule but challenged whether the rule was consistent with due process. Applying the Daimler standard, the court agreed with BNSF that Montana’s exercise of general jurisdiction over it was excessive and inconsistent with the limits of due process. The Court reiterated that general jurisdiction over a non-resident corporation is only proper in the “exceptional case” when the defendant’s contacts are “so substantial and of such nature as to render the corporation at home in that State.” As noted in the Daimler decision, a “corporation that operates in many places can scarcely be deemed at home in all of them.” The court ruled that the defendant’s activities in the state should be weighed against the defendant’s activities “in their entirety,” and that the “magnitude” of BNSF’s business in the state – 2,000 miles of track and 2,000 employees representing 5-6% of BNSF’s total business– could not alone render it subject to jurisdiction in the state.
The Court did not address appellee’s argument that BNSF consented to jurisdiction because the Montana Supreme Court did not reach this argument. Thus the significant battle ground question of whether statutes requiring foreign corporations to consent to general personal jurisdiction in order to conduct business within the state are consistent with the due process requirements of Daimler remains unanswered and is likely to be a source of ongoing litigation at the state and District Court level.
For more information on this decision and the implications of challenging personal jurisdiction please contact John C. McMeekin II at email@example.com.