The Supreme Court of Missouri reaffirmed the due process rights of national businesses in an opinion issued Feb. 28, 2017, clarifying Missouri law regarding personal jurisdiction over corporations. Plaintiffs cannot use Missouri courts to sue out-of-state companies that operate significant portions of their business in Missouri for suits unrelated to Missouri. Moreover, registering as a foreign business in Missouri or appointing a registered agent in Missouri does not constitute consent to personal jurisdiction in Missouri. Read the court’s opinion in State ex rel. Norfolk Southern Railway Company v. Dolan here.
The underlying lawsuit
The plaintiff was an Indiana resident, seeking recovery for a personal injury that occurred in Indiana. The plaintiff sued Norfolk Southern Railway Company, a Virginia corporation, in St. Louis County, Missouri. The action was unrelated to Missouri, but the plaintiff argued, among other things, that: (1) Norfolk Southern’s substantial and continuous contacts in Missouri were sufficient to establish general personal jurisdiction; and (2) Norfolk Southern consented to personal jurisdiction by complying with Missouri’s foreign corporation registration statutes. The Court soundly rejected the plaintiff’s arguments, and issued a writ of prohibition directing the trial court to dismiss the lawsuit.
No general personal jurisdiction where business conducts substantial operations in Missouri
In Daimler AG v. Bauman, 134 S. Ct. 746 (2014), the U.S. Supreme Court clarified that a state may only exercise general jurisdiction (personal jurisdiction over a defendant for actions unrelated to the defendant’s activities in the state) over a corporate defendant in three situations: (1) when the corporation is incorporated in that state; (2) when the corporation’s principal place of business is in that state; or (3) in exceptional circumstances, when the corporation’s activities are “so substantial and of such a nature as to render the corporation at home in that State.” To determine whether a corporation is “essentially at home,” the court must appraise the corporation’s nationwide and worldwide activities and determine how the forum activities compare. Continuous and systematic business activities in a state are not enough for general personal jurisdiction when those activities only comprise a small portion of the defendant’s business overall.
Following Daimler, the Missouri Supreme Court found that Norfolk Southern’s 590 Missouri employees, $232 million in Missouri revenue, and 400 miles of Missouri railroad tracks were not enough to establish general jurisdiction in Missouri. Despite these substantial operations, Norfolk Southern’s Missouri business only accounts for approximately 2 percent of its employees, 2 percent of its revenue, and 2 percent of the tracks it owns or operates. Norfolk Southern had more substantial operations in several other states, so it could not reasonably be considered “at home” in Missouri. Conferring general jurisdiction over Norfolk Southern in such circumstances would make Norfolk Southern, and any other business operating on a nationwide basis, subject to general jurisdiction in several states.
Registration as a foreign business is not consent to general jurisdiction
The plaintiff argued in the alternative that Norfolk Southern consented to personal jurisdiction over any case filed against it in Missouri when it complied with Missouri’s foreign corporation registration statutes. In accordance with the registration statutes, Norfolk Southern registered to do business in the state of Missouri and appointed a registered agent for service of process. The court stated that a “broad inference of consent based on registration would allow national corporations to be sued in every state, rendering Daimler pointless.” Merely registering in a state does not open a corporation to lawsuits unrelated to that state.
The court avoided determining whether Missouri could constitutionally condition the ability to conduct business in the state on consent to general jurisdiction, because the statutes do not mention consent to personal jurisdiction for unrelated claims. After conducting a plain language analysis, the court concluded that the registration statutes do not create an independent basis for broadening personal jurisdiction to include suits unrelated to Missouri conduct when there are no typical bases for general jurisdiction.
The Missouri Supreme Court’s opinion protects the due process rights of corporations who operate on a nationwide or worldwide basis, and prevents the waste of Missouri’s judicial resources on lawsuits that have nothing to do with the state. The Norfolk Southern opinion makes it clear that general jurisdiction is an exceptional basis for personal jurisdiction, when the lawsuit is outside the forum where a corporation is incorporated or headquartered.