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Supreme Court rulings limit where a corporation may be sued

Las Vegas Business Press
Article originally appeared on Business Press on 06/26/17

The concept of “home” has attracted significant attention from the U.S. Supreme Court, limiting the locations where a corporation can be sued. That’s good news for Nevada-based businesses.

These decisions will be helpful to local corporations who find themselves defending large lawsuits filed in the Eastern or Southern states far from home, and in jurisdictions hand-picked by plaintiffs that are known to be plaintiff-friendly.

Through a series of cases beginning in 2011, and capped by two decisions in the past three weeks, the court’s actions offer corporations the legal authority to argue that any suit against them should be brought in their home state.

Beginning with the case Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011), and then continuing with the decisions in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), and Walden v. Fiore, 134 S. Ct. 1115, 1122 (2014), the High Court has reigned in both general and specific jurisdiction.

Prior to these cases, the trend had been moving toward universal jurisdiction where a corporation could be sued nearly everywhere it did business or had a presence.

The court has now expressed its belief that a corporation should be able to anticipate where it could be sued, and those locations are limited to where the company is “at home,” meaning the state where it is incorporated or the state where its headquarters is located.

In the Daimler case, the Supreme Court clarified that a company could not be “at home” in all the jurisdictions where it did business: “A corporation that operates in many places can scarcely be deemed to be at home in all of them. Otherwise, ‘at home’ would be synonymous with ‘doing business’ tests framed before (the concept of) specific jurisdiction evolved in the United States… [T]o be such ‘an exceptional case,’ the forum state must be a ‘surrogate for place of incorporation or home office’ such that the corporation is ‘essentially at home’ in that state.”

Over the past month, the court has revisited the Goodyear and Daimler decisions to reinforce its “at home” standard and reject efforts to circumvent its prior rulings. In an opinion issued May 30, the Supreme Court held that Montana could not exercise jurisdiction over the BNSF Railway merely because it did business in Montana.

In BNSF Ry. Co. v. Tyrrell, the court reiterated that even though the railroad “has over 2,000 miles of railroad track and more than 2,000 employees in Montana… ‘[a] corporation that operates in many places can scarcely be deemed at home in all of them.’ ”

The Supreme Court again emphasized that “in-state business, we clarified in Daimler and Goodyear, does not suffice to permit the assertion of general jurisdiction over claims… that are unrelated to any activity occurring in” the forum.

The court also issued a follow-up opinion on a similar issue on June 19 in the case Bristol-Myers Squibb v. Superior Ct. of California, rejecting California’s attempt to assert jurisdiction over Bristol Myer’s Squibb in a case filed by 86 California residents, but joined by hundreds of non-California citizens.

The court found Bristol-Myers did not develop or manufacture the drug Plavix in California, and was neither headquartered or incorporated in California. The court allowed the lawsuit to proceed as to the California residents suing within the state of California, but dismissed the claims of all the nonresidents, indicating they should have filed either in their own state of residence or in the home jurisdiction of Bristol-Myers.

“[T]he nonresdents were not prescribed Plavix in California, did not purchase Plavix in California, did not ingest Plavix in California, and were not injured by Plavix in California. The mere fact that other plaintiffs were prescribed, obtained and ingested Plavix in California — and allegedly sustained the same injuries as did the non-residents — does not allow the State to assert specific jurisdiction over the nonresidents’ claims,” said the court.

Similar to the Daimler, Walden and Goodyear opinions, these new opinions issued over the past month in BNSF and Bristol-Myers should give greater protection to local companies from being dragged into lawsuits unfamiliar and distant jurisdictions.

Chris Jorgensen is a partner in the Litigation Practice Group of Lewis Roca Rothgerber Christie, LLP in Las Vegas. He focuses his practice on complex commercial litigation, including product liability, class action and consumer finance cases, in state and federal courts

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