With the Supreme Court Poised to Address Personal Jurisdiction Again, State High Courts Reject Attempts to Evade “Daimler v. Bauman”

kobakGilletteingraham

Guest Commentary

By Sara Kobak, W. Michael Gillette, and Aukjen Ingraham, Shareholders with Schwabe, Williamson & Wyatt, P.C. in Portland, OR.

Since the US Supreme Court clarified the due-process limits on the exercise of general or all-purpose jurisdiction in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), plaintiffs have reached for new arguments to support the exercise of general jurisdiction over corporate defendants in forums where the defendants cannot fairly be considered “at home.” With notable exceptions—including the decisions at issue in Bristol-Myers Squibb Co. v. Superior Court of California, Case No. 16-466, and Tyrell v. BNSF Railway Co., Case No. 16-405, both scheduled for argument before the Supreme Court on April 25, 2017—the majority of lower courts have rejected these attempts to evade Daimler and its due-process requirements. The most recent examples of decisions enforcing Daimler come from the high courts of Oregon and Missouri, with the Washington Legal Foundation submitting an amicus brief in the Oregon case.

Background

The decision in Daimler dramatically limited the application of general jurisdiction. Before Daimler, many courts understood that the Due Process Clause did not prohibit the exercise of general personal jurisdiction over an out-of-state corporate defendant as long as the defendant was engaged in substantial business in the forum state. In Daimler, however, the Supreme Court rejected that approach as “unacceptably grasping” and contrary to due-process requirements. Rather than allow the exercise of general jurisdiction in every state where a corporate defendant engages in substantial business, Daimler held that the exercise of general jurisdiction is permissible only where the defendant may be regarded fairly as “at home” in the state. Daimler further clarified that a corporate defendant ordinarily is “at home” only in its place of incorporation and its principal place of business. Although Daimler did not foreclose the possibility that a corporate defendant could be “at home” in other places, the Court explained that such a possibility would arise only in an “exceptional case” with facts like those at issue in Perkins v. Benquet Mining Co., 342 U.S. 437 (1952).

Following Daimler, plaintiffs seeking to rely on general jurisdiction have attempted to confine the holding in Daimler to its specific facts and have proffered new theories to avoid Daimler’s edicts. Along with Bristol-Myers Squibb Co. v. Superior Court of California, Case No. 16-466—a divided decision from the California Supreme Court adopting a highly expansive view of specific personal jurisdiction—the Supreme Court granted certiorari in Tyrell v. BNSF Railway Co. to review a divided decision from the Montana Supreme Court declining to apply Daimler to a case arising under the Federal Employees Liability Act (FELA), 45 U.S.C. § 51 et seq. Both the Bristol-Myers Squibb and Tyrell decisions offer an opportunity for the Supreme Court to reinforce its decisions on the due-process limitations on the exercise of personal jurisdiction over out-of-state defendants. In the meantime, recent decisions from Oregon and Missouri have rejected attempts to avoid Daimler, including arguments that FELA authorizes the exercise of general personal jurisdiction over a railroad defendant in any state where the railroad has operations.

Recent Decisions from Oregon and Missouri

In decisions released just days apart, the Oregon Supreme Court and the Missouri Supreme Court joined the majority of other state and federal courts in recognizing the new due-process limitations on the exercise of general jurisdiction arising from the Daimler decision. In a pair of cases—Barrett v. Union Pacific Railroad Company, __ P3d __ (Or. Mar. 2, 2017), and Figueroa v. BNSF Railway Co., __ P3d __ (Or. Mar. 2, 2017)—the Oregon Supreme Court held that Oregon courts lack general personal jurisdiction to hear claims arising outside of Oregon against railroad companies incorporated and principally based in other states, even if those companies engaged in substantial business in Oregon. The Missouri Supreme Court reached a similar conclusion in State ex. rel. Norfolk Southern Railroad Company v. Dolan, __ S.W.3d __ (Mo. Feb. 28, 2017).

In Barrett and Figueroa, the Oregon Supreme Court considered a variety of arguments seeking to avoid the due-process limitations on general jurisdiction from Daimler. In Barrett, the Oregon Supreme Court first rejected the notion that Daimler may be distinguished on the ground that Daimler involved an international corporation and an overseas injury, concluding that Daimler was not written so narrowly. The court also rejected arguments that the Barrett defendant’s railroad activities in Oregon provided a basis for distinguishing Daimler. Stressing that the general jurisdiction inquiry after Daimler “calls for an appraisal of a corporation’s activities in their entirety,” the court pointed out that the defendant activities in Oregon formed “only a small part of its activities” in all states in which it operated.

After rejecting attempts to distinguish Daimler, the Oregon Supreme Court also rejected arguments for other grounds for asserting general jurisdiction. In Barrett, after careful review of the statute and related case law, the court concluded that nothing in FELA purports to confer courts with personal jurisdiction over out-of-state defendants. In Figueroa, the Oregon Supreme Court additionally held that compliance with Oregon’s business registration statutes does not constitute consent to general personal jurisdiction in Oregon courts on any and all claims, even ones without any relationship to Oregon.

The Missouri Supreme Court reached similar conclusions in Dolan. In Dolan, the Missouri Supreme Court began by observing that “continuous and systematic business” in a state was insufficient to support general jurisdiction after Daimler. Rejecting the notion that substantial operations were enough for general jurisdiction, the court stressed that “an exceptional case” arises only where the forum state is “a ‘surrogate for place of incorporation or home office’ such that the corporation is ‘essentially at home’ in that state.” Like the Oregon Supreme Court, the Missouri Supreme Court also held that FELA does not confer personal jurisdiction over out-of-state railroads and that a defendant does not consent to general jurisdiction merely by complying with state business registration statutes.

In correctly refusing to limit Daimler to its specific facts and rejecting the notion that FELA confers courts with personal jurisdiction to hear claims against out-of-state railroad defendants, the Oregon and Missouri high courts declined to follow the erroneous reasoning of the Montana Supreme Court in Tyrell. In Tyrell, the Montana Supreme Court held that a railroad is subject to general jurisdiction in any state where the railroad is “doing business,” construing the “at home” rule in Daimler to apply to only transnational cases. Relying on the venue provision in FELA, the Montana Supreme Court in Tyrell also interpreted FELA to confer general personal jurisdiction on state courts. Both aspects of the Montana Supreme Court’s decision are fundamentally flawed and likely to be reversed by the Supreme Court.

Conclusion

The federal due-process limitations on the exercise of personal jurisdiction —enforced in the recent Oregon and Missouri cases—serve to protect defendants from being subject to litigation in inconvenient places, as well as to respect the competing interests of states as coequal sovereigns in a federal system. In Bristol-Myers Squibb and Tyrell, the Supreme Court again will have an opportunity to clarify those limitations and dispel any doubts as to the proper test for determining the authority of courts to exercise personal jurisdiction over out-of-state defendants.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s