BNSF Railway Co. v. Tyrrell, No. 16-405, 581 U.S. ___ (2017) [click for opinion]
BNSF involved two separate actions that were consolidated on appeal to the Montana Supreme Court. In each suit, the plaintiff asserted claims under the Federal Employers' Liability Act ("FELA") for injuries arising from their employment with BNSF. Arguing that it was not "at home" in Montana, BNSF moved to dismiss each action for lack of personal jurisdiction. In support of its motions, BNSF noted that neither employee was injured in Montana, that BNSF was not headquartered in Montana and did not have its principal place of business there, and that BNSF had only a small percentage of its total workforce (5%) and total track mileage (6%) there.
The trial court in one of the cases granted BNSF's motion, while the trial court in the other denied the motion. The Montana Supreme Court, relying on two sentences of a section of FELA as well as the state's own procedural statutes, ruled that BNSF was subject to the general jurisdiction of the Montana courts.
The FELA section relied on by the Montana Supreme Court permits an action to be brought in a U.S. district court in a district "in which the defendant shall be doing business at the time of commencing such action," and makes the jurisdiction of the U.S. district courts concurrent with that of the state courts. 45 U.S.C. § 56. Plaintiffs asserted that the first part of this section provides for personal jurisdiction over a defendant doing business in Montana in federal court, and the second part extends to state courts the alleged conferral of personal jurisdiction.
The Montana Supreme Court also contended that jurisdiction could be predicated on Montana's long-arm statute (Mont. Rule Civ. Proc. 4(b)(1) (2015)), which allows Montana courts to assert personal jurisdiction over "persons found within ... Montana." The Montana high court determined that BNSF could be "found within Montana" because it maintained more than 2,000 miles of tracks and employed more than 2,000 workers in Montana. The combination of track mileage and BNSF employees in Montana led the Montana Supreme Court to conclude that BNSF was "doing business" in Montana for purposes of FELA and that it could be "found in Montana" under the state's procedural laws.
The U.S. Supreme Court granted certiorari to decide "whether § 56 [of FELA] authorizes state courts to exercise personal jurisdiction over railroads doing business in their States but not incorporated or headquartered there, and whether the Montana courts' exercise of personal jurisdiction in these cases comports with due process." The Supreme Court emphasized that these issues were addressed to the exercise of general jurisdiction, and not specific jurisdiction, because the Plaintiffs' injuries did not arise from, and were otherwise unrelated to, any work performed by either Plaintiff in Montana.
The U.S. Supreme Court held that neither part of the FELA provision relied upon by the Montana Supreme Court addresses personal jurisdiction. While Section 56 allows an action to be brought in a district in which the defendant is doing business, that provision addresses venue, not personal jurisdiction. It thus provides no basis for haling a defendant into the courts of Montana. And Section 56's grant of concurrent jurisdiction refers to subject matter jurisdiction, not personal jurisdiction, and simply allows both federal and state courts to decide FELA cases.
Having concluded that § 56 of FELA provides no basis for establishing personal jurisdiction, the Court turned its attention to Montana's long-arm statute, which permits Montana courts to exercise personal jurisdiction over "persons found within … Montana." Despite the plain language of the Montana law, the outcome determinative issue, the Court stressed, was not whether BNSF could be found in Montana. Indeed, BNSF did not contest that it could be found in Montana, as the Montana courts construed the statute.
The critical issue was whether application of the Montana statute allowing the Montana courts to exercise jurisdiction over BNSF "comports with the Due Process Clause of the Fourteenth Amendment." The Court ruled that it did not, drawing heavily on its decisions in Goodyear and Daimler. Those decisions clarified that before a court can exercise general jurisdiction, due process requires a corporation's affiliations with the State to be "so 'continuous and systematic' as to render them essentially at home in the forum State." The "paradigm" forums in which a corporation is at home, according to Goodyear and Daimler, are the state of incorporation and the state in which the corporation has its principal place of business—for BNSF, Delaware and Texas, respectively.
The Court reiterated comments from Daimler that even when suit is not brought in a "paradigm" forum, a court can exercise general jurisdiction over a corporate defendant in an "exceptional case" in which the corporation's contacts with the forum state are "so substantial and of such a nature as to render the corporation at home in that State." In this regard, the Montana Supreme Court had found BNSF's in-state track mileage and number of Montana employees compelling. Yet the Supreme Court determined that these contacts, though arguably significant in an absolute sense, failed to comport with due process, again drawing from its Daimler decision:
[T]he general jurisdiction inquiry does not focus solely on the magnitude of the defendant's in-state contacts …. Rather, the inquiry calls for an appraisal of a corporation's activities in their entirety; [a] corporation that operates in many places can scarcely be deemed at home in all of them.
The Supreme Court thus reversed and held that there was no personal jurisdiction.