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The U.S. Supreme Court has provided some clarity to multistate businesses about where they can be sued by employees. Specifically, the high court held that two workers couldn't sue BNSF Railway under the Federal Employers' Liability Act (FELA) in Montana just because it does business there.
Railroads are liable for workers' on-the-job injuries under the FELA. In two consolidated cases, an injured worker and the estate of a deceased worker brought claims for money damages against BNSF Railway in Montana state court.
The railroad, however, argued that the cases were improperly brought in Montana because the injuries didn't happen in the state and neither worker lived in the state. Furthermore, BNSF isn't incorporated or headquartered there.
Applying state law, the Montana Supreme Court had found that the claims could be brought in the state's courts because personal jurisdiction can be exercised over parties "found within … Montana." BNSF has more than 2,000 employees and 2,000 miles of railroad in the state—though the company said this accounts for less than 5 percent of its workforce and about 6 percent of its total railroad tracks (which cover 28 states).
The Supreme Court disagreed with the Montana high court. Under the U.S. Constitution, "the Fourteenth Amendment's Due Process Clause does not permit a state to [bring] an out-of-state corporation before its courts when the corporation is not 'at home' in the state and the episode-in-suit occurred elsewhere," Justice Ruth Bader Ginsburg wrote for the court.
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"At a 30,000 foot view, the case may be viewed as quite limited, involving the narrow question of where a railroad may be sued under the FELA," said John Alan Doran, an attorney with Sherman & Howard in Phoenix. "However, the case turns on both the FELA and broader notions of personal jurisdiction under the Constitution, and therefore has much broader reach."
Grant Esposito, an attorney with Morrison & Foerster in New York City, said the broader impact is the reaffirmation that companies are not subject to general personal jurisdiction in all states where they conduct substantial business.
"For railroad employers, the decision makes it abundantly clear that, despite a powerful physical presence within a particular state, a railroad is not subject to suit in that state when the conduct occurred somewhere else and where the railroad's 'home' is also somewhere else."
Dispute About Jurisdiction
In a jurisdictional dispute, the parties to a lawsuit disagree about whether the court has the power to hear the case.
"Personal jurisdiction" refers to whether the court has jurisdiction over the parties to the lawsuit. The Montana state courts in these cases would have "specific personal jurisdiction" if the injuries happened in Montana—which they did not—so the dispute was about "general personal jurisdiction."
A state court may have general jurisdiction over an out-of-state corporation if its affiliations with the state are "so 'continuous and systematic' as to render them essentially at home" in the state, Ginsburg said.
The business BNSF does in Montana would be sufficient to subject it to specific jurisdiction if the claims were related to the business it does there, the court said. But the business BNSF does in Montana isn't enough for the state's courts to exercise general jurisdiction over the claims in these cases, which were not related to any activities that occurred in Montana, the high court held.
"The Supreme Court reiterated that general, as opposed to specific, personal jurisdiction attaches only where the company is incorporated and has its principal place of business," Esposito said.
"While the court leaves open the possibility that a level of activity in a third forum could rise to the level of being 'at home,' that has proven to be an extremely limited exception in practice and is unlikely to be found in most disputes," he added.
Doran said the example of the exceptional circumstances called out by the court—a company forced to move from the Philippines to Ohio during wartime—bespeaks how narrowly the court will construe circumstances sufficient to subject a corporation to general jurisdiction.
The case is BNSF Railway Co. v. Tyrrell, U.S., No. 16-405 (May 30, 2017).
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