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Analysis: BNSF Railway Co. v. Tyrrell, Bristol-Myers Squibb v. Superior Court

Richard D. Freer |
Professor Freer

In its most recent term, the Supreme Court gave uncommon attention to general personal jurisdiction. In two decisions, the court doubled down on a restrictive conception of that doctrine. 

Personal jurisdiction directly affects access to justice. Without it, a court is powerless to declare the rights of litigants, powerless to right wrongs. Personal jurisdiction is about the court’s authority over the defendant. It requires, first, that the defendant do something to form a volitional association, a “contact,” with the forum. Once a relevant contact is established, the focus shifts to whether the court will assert “specific jurisdiction” or “general jurisdiction.”

Specific jurisdiction is when the plaintiff’s claim against the defendant arises from the defendant’s contact with the forum state. General jurisdiction is when the plaintiff’s claim does not arise from the defendant’s “contact” with that state. In 2011, the Supreme Court limited specific jurisdiction in J. McIntyre Co. v. Nicastro. There, a New Jersey man was badly injured there while working with a scrap metal shearer. He sued the British manufacturer of the machine in New Jersey. The British company marketed the machines into the United States and sold them to a company in Ohio. The separate company then sold and shipped the machines nationwide, including into New Jersey. The court held that New Jersey did not have specific jurisdiction over the British company because that company had not targeted New Jersey specifically, and thus had not formed a relevant “contact” with that state.

The holding clearly narrowed the ambit of specific jurisdiction. With that path narrowed, plaintiffs shifted course to rely on general jurisdiction. In McIntyre, for example, everyone assumed that the British company could be sued in Ohio, even though the accident harming the plaintiff occurred in New Jersey. Why? Because for generations, general jurisdiction had been upheld wherever the defendant’s contacts were “continuous and systematic.”  Surely the British company, by shipping every machine marketed in North America to Ohio, had such contacts with Ohio and could be sued there on a claim that arose in New Jersey. (In fact, the plaintiff in McIntyre was unable to attempt suit in Ohio because the statute of limitations had run.)

But the general jurisdiction door started to close in 2011 as well. Oddly, the leader of this effort is Justice Ginsberg, who ordinarily is sensitive to the plights of plaintiffs. In Goodyear Dunlop Tires Operations, S.A. v. Brown, Justice Ginsberg concluded that general jurisdiction is possible only if the defendant’s activity in the forum is so extensive as to render the company “essentially at home” in the forum. (She got this term from a law review article.) The Court did not define “at home,” but gave as examples (1) where a corporation is incorporated and (2) where it has its principal place of business. Because these were given as examples, observers were uncertain whether Goodyear really meant to limit general jurisdiction so starkly—from every state in which the company has continuous and systematic contact to two states. 

The uncertainty abated significantly in 2014, when the Court decided Daimler AG v. Bauman. Here, Justice Ginsberg essentially converted her paradigms into rules: Corporations are subject to general jurisdiction only where “essentially at home,” which means in the (1) state of incorporation and (2) the state of principal place of business.

And principal place of business, by the way, means the company’s “nerve center,” where corporate decisions are made. Because the nerve center bears no necessary relationship to where the company actually carries on business, the law was transformed from a focus on the corporation’s actual business activity to where the business is formed and where it is governed.

The court did allow that general jurisdiction might be based upon a corporation’s activities. But in assessing that possibility, the focus is not on how much activity takes place in some absolute sense. Rather, it is in a comparative sense—compared to other places where the company does business. In other words, Walmart may have hundreds of stores and employ thousands of people in California. But it does the same in other states, and thus cannot be “at home” in California. Activities will support general jurisdiction only if virtually all corporate business is conducted in a single state. Because most one-state corporations will be incorporated or have their principal place of business in that one state, Justice Ginsberg seemed to write activities-based general jurisdiction out of existence.   

Lower courts have tried to find ways around Goodyear and Daimler. This spring, the Court slapped back two of those efforts: BNSF Railway Co. v. Tyrrell (2017) and Bristol-Myers Squibb v. Superior Court (2017). Each is a 7-1 decision, with Justice Gorsuch not participating.

BNSF involved cases brought in Montana state courts under the Federal Employers Liability Act, FELA, which permits railway workers injured on the job to sue their employer. None of the plaintiffs resided in Montana, nor did the event causing injury arise in Montana. The defendant railroad, however, did substantial business in Montana, with more than 2,000 miles of track and 2,000 employees. The Montana Supreme Court held that general jurisdiction was conferred by 45 U.S.C. § 56, which provides that a FELA action “may be brought” where “the defendant shall be doing business at the time of commencing the action.” The Montana court’s conclusion on this score was risible. Section 56 is a venue provision and has nothing to do with personal jurisdiction.

The Montana court had an alternative basis for it holding: that state law permitted general jurisdiction based upon the defendant’s level of activity in Montana. Here, the Supreme Court rebuked the state court for failing to apply Goodyear and Daimler. The defendant was not incorporated in Montana, nor did it have its principal place of business there. And activity-based general jurisdiction was no good because the defendant had similar levels of activities in many states. Justice Sotomayor, whose concurrence in Goodyear read more like a dissent, here takes up the cudgel for plaintiffs, decrying what is now clearly the Court’s position that activity-based general jurisdiction cannot exist in more than one state. 

In Bristol-Myers Squibb, plaintiffs sued a pharmaceutical company and its distributor in California for injuries suffered in other states. The allegedly defective drug was not manufactured in California, nor was it shipped through California to the plaintiffs. Nonetheless, the defendants had enormous contacts with California. The California Supreme Court recognized that the pharmaceutical company was not subject to general jurisdiction under Goodyear/Daimler. It then adopted a sliding scale approach, under which a defendant with enormous contacts with the forum can be sued for claims that are only tangentially related to activities in the state. The California court thus (magically) concluded that it had specific jurisdiction over the case.

The Supreme Court made short work of this. There is no sliding scale. All cases are either specific or general. Because the non-California plaintiffs’ claims did not arise in or relate to California, there could be no specific jurisdiction. And, as the California court recognized, the pharmaceutical company was not subject to general jurisdiction because it was neither chartered nor had its principal place of business there. 

Justice Sotomayor dissented, again decrying the fate of plaintiffs in an era in which both specific and general jurisdiction have been limited. It is difficult to work up much sympathy for the forum-shopping plaintiffs in Bristol-Myers Squibb; they can sue in their home states, according to the majority, under specific jurisdiction.

The big problem is for the American plaintiff injured at home by a foreign manufacturer. Such a plaintiff faces J. McIntyre on the specific jurisdiction front, and now has no chance of getting general jurisdiction, because the foreign company will have neither its charter nor principal place of business in the United States. Justice Ginsberg dissented in J. McIntyre, rightly in my view, but, ironically, has harmed such plaintiffs by closing the general jurisdiction door. Neither she nor anyone else has explained why this parsimonious view of general jurisdiction—now firmly established—makes sense in an era of limited specific jurisdiction.

Richard D. Freer, Charles Howard Candler Professor of Law