Missouri Supreme Court Finds No Personal Jurisdiction over Out-of-State Corporation Registered to Do Business in MissouriMarch 2017
On February 28, 2017, the Missouri Supreme Court held that a foreign corporation is not subject to personal jurisdiction in Missouri for events that occurred out of state, even though the corporation does substantial and continuous business in Missouri and is registered as a foreign corporation in Missouri.
The case is State ex rel. Norfolk Southern Railway Company v. the Hon. Colleen Dolan, a personal injury lawsuit brought against Norfolk Southern in St. Louis County Circuit Court under the Federal Employer's Liability Act (FELA) by Russel Parker, an Indiana resident who was allegedly injured as a result of his work for Norfolk Southern in Indiana. The Missouri Supreme Court relied upon the U.S. Supreme Court's rationale in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), to reject Parker's arguments that Norfolk Southern is subject to personal jurisdiction in Missouri, because of its extensive activity, and registration to do business, in Missouri.
Daimler and the U.S. Supreme Court's Limits on Personal Jurisdiction
In Daimler, Argentinian residents filed a lawsuit in California against Daimler AG, the German car manufacturer, for events occurring entirely outside the United States. Plaintiffs argued that Daimler could be sued in California, even though their claims had no connection to the state, because its subsidiary engaged in a substantial, continuous, and systematic course of business in California – including owning several facilities and selling a significant number of cars in the state. Daimler argued that the California court lacked jurisdiction over it, because Daimler had insufficient contacts with California.
The U.S. Supreme Court rejected plaintiffs' argument and upheld the basic principle that an out-of-state corporation cannot be sued for claims that arose outside of the state unless the corporation's contacts with that state "are so continuous and systematic" that it renders the corporation essentially "at home" there. Most notably, the Daimler court clarified that in all but the most exceptional cases, a corporation is only "at home" in (1) the state where it is incorporated and (2) the state where its principal place of business is located. The court explained that corporate defendants are simply not "at home" everywhere they conduct business. Holding otherwise, the court explained, would subject Daimler to lawsuits in any other state where it or its subsidiaries had substantial sales–a result the court called "unacceptably grasping."
Missouri Supreme Court Relies on Daimler to Reject Personal Jurisdiction over Out-of-State Corporation
In Norfolk Southern, the plaintiff, Russel Parker, argued that Norfolk Southern is "at home" in Missouri, and thus subject to jurisdiction under Daimler, because Norfolk Southern (a Virginia corporation with its principal place of business in Virginia) conducts substantial and continuous business in Missouri. Alternatively, Parker argued that Norfolk Southern consented to jurisdiction in Missouri when it registered to do business as a foreign corporation and appointed a registered agent in Missouri.
Following a strict application of Daimler, the Missouri Supreme Court rejected Parker's first argument. The Court held that while Norfolk Southern's activity in Missouri is, indeed, "substantial and continuous" (400 miles of track, 590 employees, and a registered agent in Missouri; $232 million in annual revenue derived from Missouri; and registered to do business in Missouri), that activity is not enough to make Norfolk Southern "at home" in Missouri and thus subject to jurisdiction for claims having nothing to do with Missouri. The Court noted that Norfolk Southern had similar contacts with numerous other states and that under Daimler, the company could not be considered "at home" in each of those states.
Next, the Court considered, and rejected, Parker's argument that Norfolk Southern consented to jurisdiction for claims unrelated to Missouri by registering to do business in Missouri and appointing a registered agent. The Court noted that the Missouri registration statute says nothing about consent to jurisdiction for such claims. The Court also looked to a recent Delaware Supreme Court decision that rejected the "jurisdiction by consent" theory. In that case, the Delaware Supreme Court observed that following such a theory would render Daimler pointless, because it would allow national corporations to be sued in every state where they did substantial business.
The Missouri Supreme Court's ruling could have a far-reaching impact as it will likely become much more difficult for plaintiffs to sue out-of-state corporations in Missouri over events that occurred elsewhere, regardless of the nature of the claim. Foreign corporations sued in Missouri should carefully evaluate whether they may have a basis for challenging jurisdiction in light of Norfolk Southern, and should be sure to take the necessary steps to preserve their jurisdictional defenses since strict waiver deadlines apply. Foreign corporations facing litigation across the Mississippi River in Illinois should also keep an eye on this issue. Illinois' Fifth District Court of Appeals is expected to issue its own ruling on the consent jurisdiction issue in the near future in Jeffs v. Anco Insulations, a Madison County, Illinois asbestos case.
If you have questions concerning your company's jurisdiction, please contact Doug Nieder, Corey Schaecher, or David Weder.
To view a the full Norfolk Southern opinion, click under "Resources" below.