The U.S. Supreme Court’s ruling in BNSF Railway Co. v. Tyrrell, announced on May 30, 2017, clarifies the personal jurisdiction boundaries imposed by the Due Process Clause of the Fourteenth Amendment. Although raised specifically in the context of a Federal Employers’ Liability Act claim, the constitutional limits announced will apply to all cases in which a court attempts to exercise jurisdiction over nonresident corporate defendants, including product liability lawsuits.
The Court found that state trial courts do not necessarily have general or “all-purpose” personal jurisdiction over a corporation that conducts substantial business activities or employs a significant number of people within the state. A court cannot exercise general jurisdiction on the basis of the magnitude of corporate activities within the state, but instead must assess whether the company’s operations when considered in their entirety identify the forum state as one of the few locales in which the defendant can be deemed “at home.” The Court also clarified that specific personal jurisdiction only exists when the corporation’s actions within the forum state are “case-linked” and tied to the particular claims asserted. In other words, the activities allegedly connecting the corporation to the state must be directly related to the case in which jurisdiction in sought to be imposed. Putting BNSF’s jurisdictional prerequisites together in the context of product liability lawsuits, before jurisdiction will exist national manufacturers and distributors must either have deep corporate links to the forum state or have undertaken specific conduct giving rise to the claims asserted in the case, such as selling the product at issue inside the forum state’s borders.
BNSF addressed two separate lawsuits brought by railroad employees against BNSF for injuries arising out of their employment. Both plaintiffs brought suit in the state courts of Montana, even though neither plaintiff lived, worked or received injury in that state. BNSF, a Delaware corporation with its principal place of business in Texas, employs approximately 2,100 workers in Montana and maintains a number of railroad facilities and operations within the state. Although BNSF’s Montana operations seem considerable, they actually represent only a small proportion of the railroad’s national activities and revenue. Despite its active connections and notable business operations within Montana, BNSF challenged the jurisdiction of the Montana courts to hear these disputes and contended that its ties to Montana were not sufficient to establish general personal jurisdiction. BNSF also disputed the plaintiffs’ claim over statute-based jurisdiction under FELA.
After disposing of the FELA-related jurisdictional arguments, the Court examined whether the exercise of personal jurisdiction by the Montana courts in these cases would comport with due process under the Fourteenth Amendment. The constraint of due process applies to all assertions of jurisdiction over non-resident defendants and “does not vary with the type of claim asserted or business enterprise sued.” The Court noted that personal jurisdiction can arise from two distinct pathways: specific or “case-linked” jurisdiction and general or “all-purpose” jurisdiction. General jurisdiction will exist for a corporation in the state where it has incorporated and where it maintains its principal place of business. Additionally, in “exceptional cases,” a corporation may carry on such substantial and deep operations within a state to make the business “at home” in that state. To reach that finding, the court must not simply look to the magnitude of the operations within the state. Instead, courts must assess the corporation’s entire worldwide operations and find an unusually heavy degree of engagement relative to its activities outside the forum state. For BNSF, even though the railroad maintains thousands of employees and generates substantial revenue within Montana, these ties were not sufficient to establish general jurisdiction.
Specific personal jurisdiction also did not exist because neither plaintiff alleged “any injury from work in or related to Montana.” State courts may exercise specific personal jurisdiction only on “claims related to the business [the defendant] does in” the forum state, and specific jurisdiction cannot exist when a plaintiff’s claims “have no relationship to anything that occurred or had its principal impact in” that state.
Following BNSF, corporations facing product liability lawsuits outside their home states should consider whether the court in which the plaintiff chose to file has personal jurisdiction. Unless a company is incorporated or maintains its principal place of business within the forum state, general jurisdiction likely will not exist. Further, specific jurisdiction can only arise if the plaintiff’s claims are linked to corporate actions undertaken in the forum state. If the corporate defendant did not design, manufacture, or sell the product at issue within the state, the BNSF ruling indicates that a state court would probably not have specific jurisdiction to hear the case.