It’s Not Personal: Companies Can’t Be Sued Everywhere
The highest courts in two states have made it more difficult for plaintiffs to sue companies in state courts of their choosing. The Oregon and Missouri Supreme Courts recently dismissed claims against companies for lack of jurisdiction where the companies were not incorporated or headquartered in the forum state, or were not sued because of their activity in the state.
These decisions come before the U.S. Supreme Court decides Bristol-Meyers Squibb v. Superior Court of California (BMS) this spring. BMS will further define the boundaries of personal jurisdiction over companies because the Supreme Court will decide whether jurisdiction attaches to a company because of its activities in a state even if the company’s specific in-state activities did not cause the plaintiffs’ injuries.
BMS will be the second time the Supreme Court has recently looked at personal jurisdiction; in Daimler AG v. Bauman, the Supreme Court held that a company’s substantial operations in a state did not establish jurisdiction because the company’s particular in-state operations made up a small portion of its nationwide and global business.
General and Specific Jurisdiction . . . Generally
Companies and individuals can be sued only in certain places because of the Constitution’s due process requirements. There are two types of jurisdiction over companies: “general” and “specific.” If a company’s presence in a state is substantial, a court might find “general” jurisdiction over the company. And if a company’s actions caused the underlying claims in a lawsuit, a court could determine that it has “specific” jurisdiction over the suit.
The First Oregon Decision: “Home” Means More than Doing Business in a State
In Barrett v. Union Pacific Railroad Co., the Oregon Supreme Court rejected the plaintiff’s argument that Oregon courts had jurisdiction over Union Pacific, because it determined that the company’s business operations in Oregon did not make the company at “home” in the state. The court reserved the possibility that in an “exceptional” case it might find jurisdiction over a party that was not incorporated or headquartered in the state, but emphasized that business operations alone did not establish general jurisdiction.
What is interesting is that this decision declined to adopt Justice Sotomayor’s reasoning from her concurrence in Daimler. There, Justice Sotomayor argued that Daimler requires courts to compare the company’s local contacts with its “nationwide and worldwide” operations to determine if personal jurisdiction exists. The Oregon court rejected this reading of Daimler, determining that the decision did not turn on the company’s worldwide contacts. The issue may arise again in BMS, and Justice Sotomayor may again reason that global corporations benefit from Daimler, because it considers companies’ nationwide and worldwide operations when assessing whether they are “at home” in the forum state.
The Second Oregon Decision: A Company with a Registered Agent in a State Does Not Impliedly Consent to Jurisdiction
Oregon, like many states, requires domestic and foreign companies to maintain registered agents in the state to accept service on the corporation’s behalf. In Figueroa v. BNSF Railway Co., the plaintiff argued that by appointing a registered agent in the state to receive service, BNSF impliedly consented to general jurisdiction in Oregon.
The Oregon Supreme Court was not persuaded. It found the plaintiff’s argument relied on outdated jurisdictional theories. Relying on the U.S. Supreme Court’s decision in International Shoe Co. v. Washington, the court focused on “the nature and quality of the corporation’s contacts with the forum state” and not the company’s “implied consent.” Because the Oregon statute was enacted after International Shoe, the court held that the legislature’s intent was not to go back to the pre-International Shoe understanding of jurisdiction.
The Missouri Decision: A Company Conducting The Same Business Activities in More than One State Does Not Establish Jurisdiction in a State Unrelated to the Plaintiffs’ Claims
The Missouri Supreme Court in Norfolk Southern Railway Co. v. The Honorable Colleen Dolan declined to accept jurisdiction over a case where the activities that allegedly caused the plaintiff’s injuries occurred in Indiana. The plaintiff argued that because Norfolk engaged in the same type of activities in Missouri as it did in Indiana, the Missouri court had jurisdiction over the company.
The court disagreed. It held that specific jurisdiction required some causal connection between the company’s activity and the plaintiff’s alleged injury—a position that the California courts disagreed with in BMS. The Missouri court concluded that the plaintiff’s argument regarding specific jurisdiction would eliminate the doctrine of general jurisdiction, because specific jurisdiction could be found in every state where a company engaged in the same type of activity giving rise to the plaintiff’s suit.
Where Should Plaintiffs Go?
With these state court decisions, and BMS pending before the Supreme Court, plaintiffs will likely have less freedom to “forum shop” for state courts with plaintiff-friendly law. Plaintiffs seeking to avoid a jurisdictional scrum will file suit in the state where the underlying injury occurred, or where the defendant corporation is incorporated or headquartered. The decisions may benefit national corporations by providing more predictability as to where they might be sued.