Thursday, June 1, 2017

United States Supreme Court Limits Forums Available to Railroad Workers

Originally published by Devin C. Reid.

The United States Supreme Court, in BNSF Railway Co. v. Tyrrell (May 30, 2017), declined to allow a personal injury plaintiff to sue a railroad company in a state in which the railroad does business but is not incorporated or headquartered.  In BNSF Railway Co., two plaintiffs brought suit for injuries in Montana “although the injured workers did not reside in Montana, nor were they injured there.”  The plaintiffs claimed that the Federal Employers’ Liability Act (“FELA”), which allows railroad workers to sue their employers for personal injuries, created a jurisdictional exception to recent cases that held that a corporation may be sued only in a state that has a connection to the injury or in the state in which the corporation is incorporated or maintains its headquarters, absent exceptional circumstances.

Both plaintiffs worked for BNSF and claimed their injuries resulted from that work.  Although plaintiffs brought suit for these alleged injuries in Montana, neither plaintiff “alleged injuries arising from or related to work performed in Montana” and neither plaintiff “worked for BNSF in Montana.”  The plaintiffs argued that BNSF’s general contacts with Montana allowed them to seek recovery through Montana courts.  At the time of the suit, BNSF maintained “2,061 miles of railroad track in Montana (about 6% of its total track mileage of 32,500)” and it employed about “2,100 workers there (less than 5% of its total work force of 43,000).”  BNSF’s Montana operations generated “less than 10% of its total revenue.”

Plaintiffs first argued that Section 56 of FELA created granted special rights to railroad workers.  Section 56 provides that a railroad employee may bring suit against the worker’s employer in the state where the employer is “doing business.”  Section 56 also establishes concurrent jurisdiction between state and federal courts for claims brought under FELA.   The Montana Supreme Court agreed with the plaintiffs and held that Section 56 authorized state courts to “exercise personal jurisdiction over railroads ‘doing business’ in the state.”  The United States Supreme Court disagreed.  First, the Court clarified that the term “doing business” as it is used in FELA pertains only to venue, where a suit may be brought if jurisdiction is proper over the defendant.  Second, the Court explained that FELA’s grant of concurrent jurisdiction allowed both state and federal courts to hear FELA actions.  In other words, under FELA, a plaintiff may bring a suit in either court system, if that claim is otherwise jurisdictionally proper.

Second, plaintiffs asserted, and the Montana Supreme Court agreed, that “Montana law provides for the exercise of general jurisdiction over ‘[a]ll persons found within’ the State.”  Here, the Montana Supreme Court found that BNSF’s railroad lines and employees present within Montana allowed it to hear the plaintiffs’ claims against it despite the fact that the plaintiffs’ injuries had no connection to Montana.  The Montana Supreme Court further held that prior cases on general personal jurisdiction were distinguishable because they did not involve “a FELA claim or a railroad defendant.”  Again, the United States Supreme Court disagreed.  Principles of personal jurisdiction do “not vary with the type of claim asserted or business enterprise sued.”  A court may exercise general personal jurisdiction over a foreign corporation if the corporation’s “affiliations with the State are so ‘continuous and systematic’ as to render them essentially at home in the forum state.”  A corporation is usually “at home” in the state where it is incorporated and where it maintains its principal place of business.  In certain exceptional circumstances, “a corporate defendant’s operation in another forum ‘may be so substantial and of such a nature as to render the corporation at home in that State.’”  Here, BNSF was not incorporated in Montana and did not maintain its principal place of business in Montana.  Further, BNSF was not “so heavily engaged in activity in Montana ‘as to render [it] essentially at home’ in that State.”  The analysis required for general personal jurisdiction requires “an appraisal of a corporation’s activities in their entirety.”  It is not enough that BNSF simply does business and maintains a presence in Montana.

The decision of an overwhelming majority of the Supreme Court is an important one for all multi-state corporations.  Businesses can be assured that they may carry out their operations without fear of having suits brought in remote or plaintiff-friendly jurisdictions simply because of the business’s minimal activities in that state.

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Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.

from Texas Bar Today
via Abogado Aly Website

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