The New Era of “Daimler” Yields Confusion in the Lower Courts

bnsfPrior to the US Supreme Court’s 2014 decision in Daimler AG v. Bauman, general jurisdiction existed over a business defendant in any state where it was incorporated, had its principal place of business, or its contacts were so “continuous and systematic” as to render them essentially at home in the forum state.  Under this expansive interpretation, corporations could be subject to lawsuits in unpredictable and often remote jurisdictions.

Daimler significantly narrowed the reach of general jurisdiction by holding that because Daimler and MBUSA were neither incorporated nor had their principal place of business in California, Daimler’s contacts with California were not enough to render it at home in the state.

Since this decision, some courts at the state and federal levels have either misunderstood Daimler or have reasoned around its holding in a way that empowers plaintiffs to sue in jurisdictions where defendants are not truly “at home.”  The highest court in Montana, for instance, rejected Daimler in a case decided earlier this year: Tyrrell v. BNSF Railway Co.  The defendant has filed a petition for certiorari with the U.S. Supreme Court—a request that Washington Legal Foundation has supported with an amicus brief.

BNSF is a freight railway carrier incorporated in Delaware with its principal place of business in Fort Worth, Texas.  The plaintiffs were not residents of Montana and no part of the injury alleged in the suit occurred in Montana.  However, the plaintiffs brought suit in Montana claiming general jurisdiction because BNSF does some business in Montana.  The Montana Supreme Court refused to apply Daimler because it claimed it was “legally and factually distinguishable.”

Because Daimler arose in the context of a dispute against two foreign companies, the court argued that the US Supreme Court intended this new test for general jurisdiction to only apply to suits against non-domestic businesses, not to US-based companies such as BNSF.  Further, the court held that Montana had general jurisdiction over BNSF because BNSF’s status as a railway business uniquely subjected it to the Federal Employers’ Liability Act (FELA), which dictated where regulated entities could be sued.

BNSF filed a petition for certiorari to the Supreme Court on October 28, 2016 arguing that the Montana Supreme Court erred in rejecting Daimler.  The petition notes that 11 federal appellate courts have flatly rejected the argument that Daimler only applies to foreign defendants.

WLF’s amicus brief argues that certiorari should be granted to clarify that FELA, a federal statute, does not confer personal jurisdiction on state courts and that Congress in fact lacks the power to extend the reach of state courts’ personal jurisdiction beyond constitutional limits.  WLF goes on to argue that if left intact, the Montana Supreme Court decision will incentivize forum shopping, which imposes personal and economic hardship not only on defendants, but also on the judiciary.

The Supreme Court will likely consider BNSF’s petition in January.  The Court decided Daimler 8-1, and Justice Ginsburg’s opinion featured concise reasoning and a clear holding.  Statements in the opinion made it clear the Court understood the negative ramifications of forum shopping.  One would thus hope the justices will be eager to end lower-court misapplication of Daimler by granting review in a case like BNSF 

One thought on “The New Era of “Daimler” Yields Confusion in the Lower Courts

  1. Pingback: Supreme Court roundup - Overlawyered

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