• Supreme Court Affirms Strict Personal Jurisdiction Rules
  • June 5, 2017 | Authors: Brendan Ballard; Thomas M. Byrne; Eleanor Keith Emanuel; Robert D. Owen; Phillip E. Stano
  • Law Firms: Eversheds Sutherland (US) LLP - Washington Office; Eversheds Sutherland (US) LLP - Atlanta Office; Eversheds Sutherland (US) LLP - New York Office; Eversheds Sutherland (US) LLP - Washington Office
  • On May 30, 2017, the U.S. Supreme Court ruled in favor of corporations in a personal jurisdiction decision, limiting the number of places where they can be sued. In BNSF Railway Co. v. Tyrrell, an 8-1 decision authored by Justice Ruth Bader Ginsburg, the Court narrowly defined the constitutional bounds of general personal jurisdiction, holding firm to its previous guidance in Daimler AG v. Bauman, 571 U.S. &under;&under; (2014) that a corporation must be “essentially at home” in the forum state.

    In BNSF Railway Co., the plaintiffs sued in Montana state court under the Federal Employers’ Liability Act, which makes railroads liable for money damages to their employees for on-the-job injuries. The Montana Supreme Court justified its exercise of personal jurisdiction based on Section 56 of the Act, which provides that an action may be brought in a district “in which the defendant shall be doing business” and that the federal courts shall have concurrent jurisdiction with the state courts.

    The U.S. Supreme Court, however, reversed the Montana Supreme Court’s decision, holding that it had interpreted Section 56 incorrectly.

    Because BNSF did not contest Montana’s statutory authority for exercising personal jurisdiction over it, the only open question was whether the exercise of jurisdiction was constitutional, i.e., whether it comported with the Due Process Clause of the Fourteenth Amendment.

    Defendant corporations are subject to specific jurisdiction when a lawsuit relates to contacts with the forum state and to general jurisdiction when their contacts are so “systematic and continuous” that they are “essentially at home” in the forum state. Because neither of the plaintiffs was a Montana resident, nor did their injuries occur there, there was no possibility of specific jurisdiction.

    In arguing that BNSF should be subject to general jurisdiction in Montana, the plaintiffs pointed to its 2,000 miles of railway and its 2,000 employees in the state. But, the Supreme Court was not swayed. It declared that the magnitude of a defendant’s contacts with the forum state should be viewed in light of its activities in other states to determine where it is “essentially at home.” BNSF’s nationwide activities meant that it was not “at home” in Montana, and therefore could not be subject to personal jurisdiction for claims not specifically arising out of its contacts with Montana. 

    The sole dissent was from Justice Sonia Sotomayor. While Daimler had acknowledged that a corporation may be subject to general jurisdiction in a state other than its place of incorporation or principal places of business, Justice Sotomayor stated that this decision eliminated that possibility. A corporation cannot fall into that exception, she posited, if it has significant contacts with multiple states. Thus, large corporations would effectively be subject to lawsuits only in their places of incorporation and principal places of business.

    This decision naturally followed the Supreme Court’s decision in Daimler, from which Justice Sotomayor had also dissented. Still, the Court continues to affirm its limits on the exercise of personal jurisdiction over large corporations. This trend is likely to continue when the Court releases its decision in Bristol-Myers Squibb v. Superior Court of California, which was argued on April 25.