RMB attorneys Allen Eraut and Kevin Bergstrom wrote an article featured in the May 3rd edition of the Defense Research Institute's Newsletter The Voice . The article discusses a recent Oregon Supreme Court decision concerning the adoption of a general jurisdictional framework that provides predictability for out-of-state corporations looking to do business in Oregon.
No Place Like Home: The Latest on General Jurisdiction
by Allen Eraut and Kevin Bergstrom
The Oregon Supreme Court’s recent decision in Barrett v. Union Pac. R.R., adopting the general jurisdiction framework set forth by Daimler AG v. Bauman, should provide predictability for out-of-state corporations looking to do business in Oregon. In cases in which no basis for specific jurisdiction exists, out-of-state corporate defendants may now seek dismissal and require that a claim be filed in their home jurisdiction. On the other hand, some uncertainty still remains about how far Daimler extends, particularly when it comes to the question of “consent” jurisdiction.
In 2014, the U.S. Supreme Court issued its landmark ruling in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), clarifying the bounds of general jurisdiction under the Due Process Clause. In Daimler, the plaintiffs argued that California had general jurisdiction over Daimler AG, a foreign corporation, through the California contacts of its subsidiary, Mercedes-Benz USA (MBUSA). The Court held that even if MBUSA’s $4.6 billion in sales were attributed to its parent, Daimler, there would still be no basis for general jurisdiction. General jurisdiction only exists when a corporation’s contacts are so “continuous and systematic as to render it essentially at home.” Absent exceptional circumstances, this means its place of incorporation and principal place of business. Id. at 761, 762 n.19. The magnitude of a defendant’s in-state contacts alone does not determine whether a corporation is “at home” in that state, for “[a] corporation that operates in many places can scarcely be deemed at home in all of them.” Id. at 762 n.20. Rather, corporate activities must be considered in their entirety, nationwide or worldwide. MBUSA’s California sales accounted for 2.4 percent of Daimler’s worldwide-sales figures, meaning that Daimler only had “slim contacts” with the state. Id. at 760–61.
The Oregon Supreme Court embraced Daimler in Barrett v. Union Pac. R.R. Co., 361 Or. 115 (Or. 2017). In Barrett, the plaintiff brought a claim in Oregon for injuries sustained while working for Union Pacific in Idaho, arguing that Oregon had general jurisdiction based on the railroad’s “substantial” activities in the state. Id. at 118. Union Pacific is incorporated in Delaware and has its principal place of business in Omaha, Nebraska. It has operated in Oregon since 1863, and it owns over a thousand miles of track in the state. Id. The court considered these contacts substantial, but noted that Union Pacific’s Oregon activities were still only a small fraction of its overall national activities. The court rejected general jurisdiction, finding that Daimler did not support finding general jurisdiction in every state where corporate revenues or business activities were sizeable. Id. at 125–26.
The plaintiff also argued jurisdiction under the Federal Employees Liability Act (FELA), relying on case law in which the state asserted personal jurisdiction over railroad defendants for merely doing business in the forum. Barrett rejected this theory as inconsistent with Daimler, but the decision noted the existence of another line of “doing business” cases. Other courts have labeled this “consent” jurisdiction, which is the theory that out-of-state corporations consent to general jurisdiction by complying with state registration statutes requiring appointment of an agent for service of process. Courts differ on whether following state registration statutes means that a company consents to jurisdiction in that state. See Bane v. Netlink, Inc., 925 F.2d 637 (3d Cir. 1991) (upholding consent general jurisdiction under the Pennsylvania statutory scheme); Ratliff v. Cooper Laboratories, Inc., 444 F.2d 745, 748 (4th Cir. 1971) (“The principles of due process require a firmer foundation than mere compliance with state domestication statutes”). Barrett declined to address whether Oregon’s registration statute purported to (or even could) confer the authority to exercise general jurisdiction over out-of-state corporations. Barrett, 361 Or. at 130 n.16.
Oregon has joined the national trend embracing Daimler’s restrictions on “at home” general jurisdiction, providing more certainty to out-of-state corporations. See, e.g., Bristol-Myers Squibb Co. v. Superior Court, 377 P.3d 874 (Cal. 2016); Magill v. Ford Motor Co., 379 P.3d 1033 (Colo. 2016). Yet consent jurisdiction remains an open question. Indeed, it is difficult to square Daimler with a rule allowing general jurisdiction by consent in every state where a corporation must register to do business. The Second Circuit in Brown v. Lockheed Martin Corp. found that interpreting Connecticut’s business registration statute as conferring general jurisdiction to the state over out-of-state corporations would “risk unravelling the jurisdictional structure envisioned in Daimler and Goodyear based only on a slender inference of consent pulled from routine bureaucratic measures that were largely designed for another purpose entirely.” 814 F.3d 619, 639 (2nd Cir. 2016).
Even so, this view is not universal. For instance, in Acorda Therapeutics v. Mylan Pharms., Inc., a Delaware U.S. District Court found that Daimler did not address, and therefore did not preclude, general jurisdiction by consent through corporate registry laws, despite acknowledging that such an interpretation could mean that the defendant was subject to general jurisdiction in 22 different states. 78 F. Supp. 3d 572, 583–84, 590 n.17 (D. Del. 2015). Interestingly, the Delaware Supreme Court explicitly disagreed with Acorda, and the court held that the state’s registration statute did not confer general jurisdiction in light of Daimler. Genuine Parts Co. v. Cepec, 137 A.3d 123, 145–48 (Del. 2016) (“a foreign corporation’s consent to personal jurisdiction cannot be coerced or conditioned on the corporation waiving its right not to be subject to all-purpose jurisdiction”).
By embracing the Daimler framework, Barrett joins a growing number of cases that provide predictability for corporate defendants in structuring their business. Other cases will have to answer whether consent jurisdiction remains valid in a post-Daimler world.